Weekly Outlook: March 7 – 11 ‘Crude Oil, Gold, Silver, Copper and Forex’

5 Things to Watch on the Economic Calendar This Week

The bulls are back in control thanks to their central banker friends

By Investing


In the week ahead, market players will be focusing on the outcome of Thursday’s European Central Bank meeting amid growing indications the central bank could ramp up its stimulus program and push rates further into negative territory.

Meanwhile, China is to release what will be closely watched trade and inflation data amid ongoing concerns over the health of the world’s second biggest economy.

Traders will also be awaiting monetary policy announcements from the Bank of Canada and the Reserve Bank of New Zealand.

Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.

1. European Central Bank policy meeting

The European Central Bank’s highly anticipated interest rate decision is due at 12:45GMT, or 7:45AM ET, on Thursday, with most of the focus likely to be on President Mario Draghi’s press conference 45 minutes after the announcement.

The consensus is that the ECB will cut the deposit rate further into negative territory to -0.40% from -0.30%. Market analysts also expect the central bank to increase the size of its monthly quantitative easing program to €75 billion from the current €60 billion.

2. Chinese trade data

China is to release February trade data at around 3:00GMT on Tuesday, or 10:00PM ET, Monday. The report is expected to show that the country’s trade surplus narrowed to $50.2 billion last month from $63.3 billion in January.

Chinese exports for February are forecast to have dropped 12.5% from a year earlier, following a decline of 11.2% a month ago, while imports are expected to slump 10.0%, after falling 18.8% in January.

On Thursday, China is to publish reports on February consumer and producer price inflation. The data is expected to show that consumer prices rose 1.9% last month, compared to a reading of 1.8% in January, while producer prices are forecast to fall by 4.9%, which would be the 46th straight monthly decline.

3. Bank of Canada rate decision

The Bank of Canada’s latest interest rate decision is due at 15:00GMT, or 10:00AM ET, on Wednesday, with most experts expecting the central bank to stand pat on rates.

Some market analysts expect BOC Governor Stephen Poloz to sound more upbeat about the economy and signal a greater willingness to move away from its easing cycle.

4. Reserve Bank of New Zealand monetary policy update

The Reserve Bank of New Zealand’s monetary policy update is due at 20:00GMT, or 3:00PM ET, on Wednesday. Market experts are split on whether the RBNZ will move on rates, with some predicting a 25 basis point cut to a record low 2.0%, while others expect no change.

Reserve Bank governor Graeme Wheeler cut the benchmark rate four times last year and in his review of the official cash rate in January, he opened the door for further cuts.

5. Fed speakers

With very little U.S. data on the economic docket this week, market players will pay close attention to speeches from a pair of Federal Reserve officials on Monday to judge the balance of opinion among policymakers on the prospect of further rate hikes.

Federal Reserve Governor Lael Brainard is due to deliver a speech titled “Economic Outlook, Liquidity and Resilience” at the Institute of International Bankers Annual Washington Conference, in Washington D.C. at 18:00GMT, or 1:00PM ET, Monday.

At the same time, Fed Vice Chairman Stanley Fischer will deliver a speech titled “Reflections on Macroeconomics Then and Now” at the National Association for Business Economics policy conference, in Washington D.C.


Crude Oil

© Reuters.  WTI, Brent oil futures end sharply higher; log 10% weekly gain

Oil prices climbed to the highest level since early January on Friday, as traders shifted their focus from a global supply glut to signs of slowing U.S. shale production amid continued hopes that major producers will work together to freeze output.

On the New York Mercantile Exchange, crude oil for delivery in April surged to an intraday peak of $36.34 a barrel, the most since January 6, before closing at $35.92, up $1.35, or 3.91%.

Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. decreased by eight last week to 392, the 11th straight weekly decline and the lowest level since 2009.

There are now nearly 69% fewer rigs of all kinds from a peak of 1,609 in October 2014. A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.

For the week, New York-traded oil futures jumped $3.20, or 9.58%, the third straight weekly rise. Since falling to 13-year lows at $26.05 on February 11, U.S. crude futures have rebounded by approximately $10, or 29%.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery soared $1.65, or 4.45%, on Friday to close the week at $38.72 a barrel after rising to an intraday peak of $38.95, a level not seen since January 4.

On the week, London-traded Brent futures rallied $3.62, or 10.31%, the second consecutive weekly gain, as continued hopes major oil producers will discuss a potential output freeze lifted prices.

Brent futures are up by roughly $9, or 25%, since briefly dropping below $30 a barrel on February 11. Short-covering began in mid-February after Saudi Arabia and fellow OPEC members Qatar and Venezuela agreed with non-OPEC member Russia to freeze output at January levels, provided other oil exporters joined in.

A meeting is planned later this month in which producers will discuss the details of the proposed action.

Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share, driving down prices by more than 70% over the past 20 months.

Meanwhile, Brent’s premium to the West Texas Intermediate crude contract stood at $2.80, compared to a gap of $2.50 by close of trade on Thursday.

In the week ahead, oil traders will be focusing on U.S. stockpile data on Tuesday and Wednesday for further evidence of a slowdown in U.S. production amid mounting concerns over a domestic supply glut.

Developments surrounding a potential deal between OPEC and non-OPEC producers to cap output will also be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Tuesday, March 8

China is to report on the trade balance.

The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.

Wednesday, March 9

The U.S. Energy Information Administration is to release its weekly report on crude stockpiles.

Thursday, March 10

China is to release data on consumer and producer price inflation.

The European Central Bank is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

The U.S. is to produce weekly data on initial jobless claims.

Friday, March 11

The International Energy Agency will release its monthly report on global oil supply and demand.

The U.S. is to round up the week with a report on import prices, while Baker Hughes will release weekly data on the U.S. oil rig count.


Gold / Silver / Copper futures

© Reuters.  Gold futures finish week at 13-month high

Gold prices rallied to a 13-month peak on Friday, as investors scaled back expectations on how fast and how far the Federal Reserve might raise interest rates this year after U.S. employment data showed strong jobs growth combined with low wages.

Gold for April delivery on the Comex division of the New York Mercantile Exchange jumped $16.40, or 0.99%, to close the week at $1,270.70 a troy ounce after hitting an intraday peak of $1,280.70, the most since February 3, 2015.

The U.S. Labor Department reported Friday that the economy added a more-than-expected242,000 jobs last month, while the unemployment rate held steady at 4.9%. However, average hourly earnings fell 0.1% last month, representing the first monthly decline in wages in more than a year.

The mixed data lessened the threat of an early interest rate hike from the Federal Reserve, boosting the appeal of the precious metal and sending the dollar broadly lower.

The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, shed 0.37% on Friday to end the session at 97.25, the lowest since February 22.

Dollar weakness usually benefits gold, as it boosts the metal’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

For the week, gold prices tacked on $51.30, or 4.11%. Prices of the yellow metal are up nearly 18% so far this year as investors seek safe havens in the face of mounting instability in other financial markets.

Also on the Comex, silver futures for March delivery surged 55.0 cents, or 3.63%, on Friday to close at $15.68 a troy ounce. On the week, silver futures soared 94.6 cents, or 6.75%.

Elsewhere in metals trading, copper for May delivery climbed 6.6 cents, or 2.99%, on Friday to end the week at $2.274 a pound. Futures rallied to an intraday peak of $2.304, a level not seen since November 4.

For the week, Comex copper prices skyrocketed 14.9 cents, or 7.22%, the best weekly performance since December 2011.

Prices of the red metal have been well-supported in recent weeks amid mounting expectations for further stimulus measures from central banks in Europe and Asia.

In the week ahead, market players will be focusing on the outcome of Thursday’s European Central Bank meeting amid growing indications the central bank could ramp up its monetary stimulus program and push rates further into negative territory.

Meanwhile, China is to release what will be closely watched trade and inflation data amid ongoing concerns over the health of the world’s second biggest economy.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, March 7

The Eurogroup of euro zone finance ministers are to hold talks in Brussels.

Federal Reserve Governor Lael Brainard and Vice Chairman Stanley Fischer are due to speak at public events throughout the day.

Tuesday, March 8

China is to report on the trade balance.

Bank of England Governor Mark Carney is due to testify on the U.K.’s European Union membership before the Parliamentary Committee in London.

Wednesday, March 9

The Bank of Canada is to announce its benchmark interest rate and publish its rate statement.

Later in the day, the Reserve Bank of New Zealand is also slated to announce its rate decision and publish a rate statement.

Thursday, March 10

China is to release data on consumer and producer price inflation.

The European Central Bank is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

The U.S. is to produce weekly data on initial jobless claims.

Friday, March 11

The U.S. is to round up the week with a report on import prices.


Forex

© Reuters.  Dollar weakens as mixed U.S. jobs report damps expectations for short term rate hike

The dollar weakened against the other major currencies on Friday as a mixed U.S. jobs report for February dampened expectations that the Federal Reserve would raise interest rates again in the near term.

The Labor Department reported that the U.S. economy added 242,000 new jobs last month, easily outstripping forecasts for wage growth of 190,000.

The unemployment rate held steady at an eight-year low of 4.9%, in line with forecasts.

But average hourly earnings fell by 0.1% during February, reversing the 0.5% rise seen in January. The drop in average earnings lowered the year-on-year gain in earnings to 2.2% from 2.5% in January.

The weak wage numbers indicated that consumer inflation is likely to remain muted. Fed policymakers are watching inflation closely as they try to determine when to raise rates again.

Higher interest rates would boost the dollar by making it more attractive to yield-seeking investors.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid to two-week lows of 97.03 before settling at 97.34. The index ended the week down 0.85%.

The euro rose to one week highs against the dollar, with EUR/USD hitting 1.1043, before pulling back to 1.1004 in late trade, up 0.45% for the day.

The dollar ended the day little changed against the yen, with USD/JPY at 113.76.

The greenback hit one-week lows against the Swiss franc in the immediate aftermath of the jobs report, before bouncing back, with USD/CHF at 0.9928 late Friday.

The commodity linked currencies posted strong gains, amid a rally in commodity prices.

The Australian and New Zealand dollars both rose more than 1%, while the Canadian dollarrose to three-month highs as solid domestic trade data was seen as lessening the chances of a rate cut.

In the week ahead, investors will be focusing on Thursday’s European Central Bank meeting after the bank disappointed expectations with a smaller-than-expected stimulus move at its December meeting.

Central bank meetings in Canada and New Zealand will also be closely watched.

Investors will also be zoning in on inflation and trade data from China amid concerns that the world’s number-to economy is heading for a hard landing.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, March 7

Germany is to release data on factory orders.

The Swiss National Bank is to publish data on its foreign currency reserves.

The Eurogroup of euro zone finance ministers are to hold talks in Brussels.

Federal Reserve Governors Lael Brainard and Stanley Fischer are both due to speak at an event in Washington.

Tuesday, March 8

Japan is to release revised data on first quarter gross domestic product.

China is to publish a report on the trade balance.

Bank of England Governor Mark Carney is to testify on Britain’s European Union membership before the Parliamentary Committee in London.

Canada is to release data on building permits.

Wednesday, March 9

Australia is to produce private sector data on consumer sentiment as well as official data on home loans.

The U.K. is to report on industrial and manufacturing production.

The Bank of Canada is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

Thursday, March 10

The Reserve Bank of New Zealand is to announce its benchmark interest rate and hold a press conference to discuss the monetary policy decision.

China is to release data on consumer price inflation.

The ECB is to announce its monetary policy decision. The rate announcement will be followed by a post-policy meeting press conference with President Mario Draghi.

The U.S. is to release the weekly report on initial jobless claims.

Friday, March 11

The U.K. is to release data on the trade balance.

Canada is to release its employment report for February.

The U.S. is to round up the week with data on import prices.