Offset by oil

February 22, 2016 09:47 AM

Currencies

As interest rate yields decline, dollar attraction is offset. This week saw the dollar decline against most of its trading partner currencies. Against the Japanese yen, the dollar lost 7.1% since the beginning of the month. Concerns over global growth weakness and market volatility are another factor.

The euro closed at $1.1139, up 35.50 as the U.S. dollar index lost 33 points to close at 96.63. The Swiss franc gained 51 points to close at $1.0112. Others included the Japanese yen up 72 points to 8882.5 and the British pound 45 points to $1.4362.

Losses were posted in the Canadian dollar 19 points to 72.59c, and the Australian dollar 10 ticks to 71.41c. We continue to favor the sidelines as data emanating from Europe and Far East as well as geopolitical concerns over the Middle East permeate the marketplace.


Energies

Crude oil closed at $29.64 per barrel, down $1.13 or 3.7%, but for the week was up 0.7%. Trading on Friday was quiet after Baker Hughes reported that the number of U.S. rigs declined for a ninth straight week. That kept prices from declining further. Brent oil declined $1.27 closing at $33.01 per barrel in London.

We prefer the sidelines in crude, even as some traders feel the market has achieved a technical bottom. We disagree and feel a global recession could negate any change in the supply/demand situation.


Precious metals

April gold closed at $1,230.80 per ounce, up $4.50 or 0.4%, but posted a weekly loss of 0.7%. U.S. inflation data affected interest rate yields and inflation data below the Federal Reserve's 2% target thanks to declining oil prices and sluggish global economic growth is not conducive to gold attraction.

March silver closed at $15.373 per ounce, down 5.9c and for the week lost 2.6%, it’s first weekly decline in about a month. March copper closed at $1.0765 per pound, up 0.3c. We see no reason for any gains in copper tied to our expectation of a global recessionary trend. April platinum closed unchanged at $946.60 per ounce and March palladium closed at $499.05 per ounce down $5.80 or 1.1% and lost 3.3% for the week.

We prefer the sidelines in this group, but silver appears to have bottomed out for now and would be our favorite in the group should inflationary data emerge. Otherwise, stay out.

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About the Author

John has over 40 years experience at major U.S. Brokerage firms as Manager and Director of various International Divisions and is the founder of his own trading and brokerage firms. Over the years John has gained a wealth of knowledge and experience in all aspects of investments and trading. He was also a floor trader at the Commodity Exchange in New York. He formed Acuvest in 1999 and can be reached at futures@acuvest.com.