The conservative approach

May 23, 2016 09:44 AM

Currencies

The U.S. dollar index closed Friday at 95.35, up 5.5 points on the expectation of a Fed rate increase possibly as soon as June. We do not believe that based on our assumption of continued tepid U.S. economic growth that the Fed would even consider dampening U.S. investor "enthusiasm" by raising rates. The euro closed at $1.1222, up 14 ticks, the Swiss franc lost 10 ticks to $1.0097, the Japanese yen 0.09084, down 18.5 points, The British pound $1.4488, down 13 ticks, the Canadian dollar .7618, down 18, and the Australian dollar .72.15c, unchanged. We remain on the sidelines.


Energies

June WTI crude oil closed at $47.75 per barrel, down 41c Friday on profittaking after trading higher during the week posting a gain of 3.3% for the week. Production outages on news that exports from Libya had been affected by disputes between two opposition groups fighting for control of the country. Gains were tempered on Friday after reports that exports had now resumed.

Other factors for the weekly gains were the continued fires in Canada which affected around 1.4 million barrels a day of production as well as Nigeria attacks removing half a million barrels a day. We could see further momentum gains in crude, but a global glut as well as reduced demand should temper any gains and prompt a continuation of recent selling in crude.


Precious metals

June gold closed at $1,252.90 per ounce, down $1.90 and for the week was down 1.6% after losing 1.7% during the prior week. July silver closed at $16.532 per ounce, up 3.9c, but for the week lost 3.5%. Expectation for a Fed Increase prompted the strength in the dollar and weakness in dollar denominated commodities.

July platinum closed at $1,023.30 per ounce, up $10 while June palladium gained 45c to $558.90. For the week platinum lost 2.7%, palladium 5.7%. We remain on the sidelines in precious metals. July copper, which is tied to economic growth lost 0.5c to close at $2.056 per pound.

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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.