Market update: The US Dollar grills lazy traders, oil prices lower after the dramatic Netanyahu speech

2 May

by Mihály Tatár

 

Good Morning!

 

  • While major stock markets moved relaxed during the long weekend (SPX +0.25% – still testing the key January lows, Nasdaq +0.91% – saved by Apple announcing a nice 100 billion USD buyback plan, DAX +0.25% – supported by the weaker Euro, Nikkei -0.30% – a bit of profit taking after the World Peace sentiment on the Korea talks and the resulting 11% rally), currency and commodity markets were all the more active: Propelled by the robust US data (US GDP grew 2.3% Q/Q, even more than expected, the PMI manufacturing index again showed rapid expansion at 56.5), the hawkish Fed, and, as discussed here before, the fact that the ’magic’ 1.25 level in EURUSD always held despite everyone being long the Euro, resulted in a massive wave of USD strengthening (EURUSD 1.1990, JPY 109.90, GBPUSD 1.36, USDPLN 3.567, USDHUF 262, THB 31.75). (You know that this move has hurt a lot of people when even Bloomberg talks about a ’mysterious’ Dollar rally.) In oil prices – also surprising the usual media talking heads – traders used the dramatic Israeli PM Netanyahu speech (’Iran lied, we have 100.000 documents from the Iranian nuclear weapon programme’) to take some profits on the nice run (WTI 67.40 USD, Brent 73.10 USD). The talk is that 1. without an approval from Mike Pompeo and Trump, nor the speech, nor the latest Israeli air strikes in Syria on Iranian positions could have happened 2. the US verification of the Israeli intel is a diplomatic game-changer and puts the EU in an even weaker position – this is not like the hard-to-prove gas poison attack 3. Russia already seems to be pushing Teheran towards a negotiated settlement as the Iranian financial system is approaching the level of no return. (Some commentators even add that it is hard to believe Mossad had no help from Iran’s security establishment in this operation, who may want to avoid an unleashed ’Bomber Bolton’.)  As the latest sign of Trump’s warming up towards Russia, the US Treasury department extended the deadline for Russian billionare Oleg Deripaska to divest from United Rusal and EN+, further stabilizing the metals market and essentially allowing the once mighty Russian company to stay in business.

 

Have a nice week,

Mihály

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