Weekly reviews

US dollar extends losses on profit taking after yesterday weak data

On Wednesday, US markets closed in the red. The markets have come under pressure amid oil market local decline from year highs and profit-taking that tend to gain momentum at the end of the year.

Home sales data were unexpectedly weak and become the cause of the negative market dynamics. These data do not usually have a significant impact on the market, but due to technical overbought and "thin" market, the prints had a negative impact. Home pending sales fell to -2.5% in November from the previous month, with forecast at 0.5% of growth. Home purchase contracts fell in November to its lowest level in the United States this year, showing that the increase in mortgage rates puts pressure on the real estate market. 10-year US bonds yield fell to the lowest level in two weeks, up to 2,492%.

Preliminary data showed an increase in US oil inventories, which was reflected in the oil prices and energy sector as a whole. According to the American Petroleum Institute, US crude stocks rose by 4.2 million barrels for the week ending 23 December.

Europe on the contrary showed a positive closing of the major indexes. Among the statistics it is worth noting the growth of retail sales in Spain (3.3% year value)

Today, European stock markets opened and traded in negative territory amid growing concern about the Italy banking sector. The lack of economic data, these days, attracted the investor attention to the banking and commodity sectors, which are able to spoil the pre-holiday sentiment. US futures traded in neutral pointing to a flat Wall Street start.

In the Forex currency market, US dollar moved to correction. Yesterday housing data triggered closure of long positions in the US currency. The weakening of the US currency led to profit-taking and technical pullback in the pair USD / JPY. Today, the pair is trading at JPY 116.36 levels

Despite US strong data from API, Brent was able to stay on $ 56 level per barrel, and the correction did not follow. Local weakness of the US dollar will support oil as and the mid-term speculative sentiment remains strong. However we believe that Brent will remain in the range of $ 53- $ 56 in the next few trading days. It is not likely that players will try to update the year highs before long New Year holidays.

Market decline that we witnessed yesterday was somehow expected as the profit taking had been expected even before Christmas. In a thin market, correction might have a significant pullback. The current moment is interesting as the intrigue persist if US investors will be brave enough to go for holiday on a major note and make some signs for New Year start. In relation to this today trading is very important due to expected bunch of US data. Today we expect a large block of statistics on the US market. The focus of labor market data and the official data of oil inventories.