A volatile week ends on a high note for equities and commodities

Friday, November 21, 2014

It has been a fairly volatile week for equity and commodity markets. Global equities fluctuated strongly while the USD index continued its strong upside rally above 88.00, adding further pressure to most commodity prices.

USD index rallied above 88.0

DXY Curncy (DOLLAR INDEX SPOT)   2014-11-21 15-48-31

On the bearish side, we received fairly mixed US economic data which caused volatile and nervous trading conditions, while disappointing Japanese GDP data confirmed that Japan fell into recession in the Q3 2014. In addition, Markit manufacturing PMI data in Eurozone was fairly modest, showing signs of slowdown in the European economies adding some pressure to euro which fell towards 1.24 against the US dollar.

EURUSD - The euro comes under heavy pressure

EURUSD Curncy (EUR-USD X-RATE)   2014-11-21 16-23-37

However, this morning sentiment improved as we received fairly optimistic news from China. Global equities markets rebounded and crude oil prices spiked after China cut interest rates for the first time since 2012 to boost the economy. The CAC, DAX, IBEX and London equity benchmark rallied between 1.2% and 3.5%, while the Dow Jones index climbed more than 0.75% heading towards 17,900.

DAX index climbs above 9,700

DAX Index (Deutsche Boerse AG Ge 2014-11-21 16-24-57

Precious metal prices climbed higher in today’s session. Gold rallied strongly, breaching above $1200 and silver gained more than 1.5% to retest $16.5. Base metal prices posted strong gains today with all remaining in positive territory. Copper rose above 6,700 and tested a high at 6772.50, reaching its highest level in three weeks.

XAU- Gold rallies above $1,200/ounce

XAU Curncy (Gold Spot   $_Oz )  D 2014-11-21 16-26-20           

Next week, investors’ attention will turn to the release of the widely expected OPEC meeting on Thursday, as OPEC officials gather in Vienna to discuss about any possible production cuts, which could provide strong support to crude oil prices for the short-term. It seems that we could see high volatility and more downside pressure in the oil market ahead of the OPEC meeting.

More from: Myrto Sokou