After a fluctuating period at the last weeks of 2016, the global forex market has found a chance to breathe with the New Year. When we look at the main topics of 2017, we will face with Fed interest increase and referendum issues in the Eurozone. The pace of interest rate hikes will continue to affect global markets. Of course, the first two months performance of Donald Trump who is sitting on the presidential seat in the US after 20th January will be so important for the global market pricing. When we look at the European economy and politics, we can see that 2017 will be the election year in the European zone. First, we will start the election marathon in the EU with the German presidential elections on February 12th. Then there will be Dutch parliamentary elections in March, the French presidency in April and general elections in France in June. In addition, there can be some developments about Brexit referendum in the UK.
However, if you look at the oil market, there could be observed a positive stable trend as a result of oil production limitation decision by OPEC. When we look at the current condition, the 60 USD level can be determined as the main target level for the oil market. On the other hand, ounce gold is close to the critical levels of 1,050 USD on the global forex market. In 2017, the declining trend underneath may gradually decline and may uplift its position towards 1,200 USD. When we compare the latest periods of the gold market, we can observe a weaker trend on gold market for the first weeks of the new year.
While the FED has raised 25 basis points in the December meeting, it has announced that it expects to increase interest rates by 3 points in 2017. In the post-meeting explanations, a positive picture was drawn about the economy in general. However, revisions in growth and inflation forecasts are rather low. Trump's incentive package does not appear to have any impact on growth and inflation. The FED is not likely to follow a more aggressive policy on the path of interest without seeing clearly. With Trump sitting on the chair on January 20th, a clearer picture emerges. The economic activity of the first two-quarters of the coming year will be sufficient to see the consequences of Trump's economic policies.
Fed officials stated that they are planning three different interest rate in 2017. Economic activity increased significantly in the third and fourth quarters. Trump's policies are expected to strengthen inflation and growth. Inflation expectations are at the highest level since 2015. This year, the Fed can reach the target when we think of a US economy that is headed towards full employment.
Turkish Economy and Politics will be determinant for the global markets
Inside, the expected presidential referendum in April or May can put pressure on the markets and the wait and see process can be effective. Another important expectation at home is that Fitch will assess the credit rating, which is expected to be made on January 27th. If we have a negative view, and if the credit score is lowered at Fitch, then Turkey would have lost the only investment grade Turkey have, which could lead to continued fund outflows. In such a case, fragility in Turkish Lira may increase. In the case of Fitch's past, internal and external developments seem to be heavier on the agenda. However, the sensitive view in the Turkish Lira may continue to create pressure on both the Central Bank and the markets in the first quarter of the year.
First of all, let’s start with the latest developments and market prices of the gold market. After Trump’s coming into office, the gold market showed a bit positive performance, but we can say the 1210 USD level is still important in the global forex market. When we look at the big picture of the gold market in January, the starting point was 1157 USD level at the beginning of the month. During the month, we could observe a positive trend on gold prices. At 23rd January, the parity tested over the 1216 USD level which was the highest point of January.
We expect that gold prices will see a downward movement as we expect the dollar to continue its strong course in the short term. However, considering that the policies that the Trump administration will not make as good as the US economy does, and the uncertainties in the global markets are likely to increase, gold prices may rise again even if they have short-term withdrawals. In this context, the short-term declines in gold prices can be considered as an opportunity to buy. From a technical standpoint, it is important to maintain persistence on the 1208 level so that the tendency to recover underneath is significant, while levels 1215 and 1214 can be targeted for the upsurge. If sales pressures are seen below, support levels of 1192 and 1180 can be followed respectively.
The silver market has experienced a positive trend during the first weeks of 2017. The starting point was at 16.11 level at the beginning of the year. After a positive process, the silver price reached 17.22 level on 24th January. We have seen 17.22 resistance, which can be critically assessed in the short-term crucible as the continuation of movements upwards in silver prices. We see that this slowdown is not strong and that the 17.22 resistance has not yet moved downward. Therefore, it is possible that this level will be overcome. If the resistance of 17.22 is exceeded and permanence is maintained, the short-term rising channel formation upper band, 17.40, followed by 17.51 and medium term descending trend resistance 17.81, which is a much more important point, will enter the pot.
The concept of “seasonality” has become so widespread at the last times in the global oil market. Looking at price movements in the oil market over the past few years, prices have bottomed towards the end of the first quarter of the year, and the prices remain high until the last quarter of the year. In other words, we are talking about buying side in petroleum market in March and producing a strategy with a buying direction until October. As a general outlook, the weak process has been continuing in oil market at the last years. Like the last years, this January has performed a negative trend on the oil market.
When we look at the Brent oil market firstly, 57.49 USD was the starting level at the beginning of the year. The 53.67 USD level was the lowest level of the month which was reached on 10th January. With the second half of January, we could observe a fluctuating trend in the Brent oil market. Looking at January especially, oil prices generally followed a weak trend every year. In February and March, the oil market is showing a weak trend, but after, we can observe a bit positive trend. This year we are facing a different picture. Oil prices remain high with the effect of the November 2016 OPEC production limitations. Finally, nowadays, crude oil prices is continuing over the 52 USD level at the last days of January.
When we look at the EUR/USD parity with the beginning of 2017, we can observe a positive trend on the prices. The starting point was at 1.0519 level for the parity and reached 1.0755 level in 25th January. The main reason of this stronger period on EUR/USD parity is that the strong PMI data released by EU zone. While this may have led to a general pricing on the Euro, the elections of Germany and France remain a major risk this year. While this may limit the likely positive impact of the economic recovery on the currency, the dollar is pressuring the Dollar to explain that the dollar is overvalued by the new administration in the US in excess of the Dollar.
GBP/USD parity is one of the most important parities in the global forex market which is given a drive to the world financial markets. Like many major currencies of the world, the GBP/USD parity experienced a positive trend in January. The starting point was at 1.2293 level at the beginning of 2017 and reached 1.2034 level which was the lowest level of the month. But after this date, the parity showed a strong recovery signal and reached the 1.25 level at the end of the month. We are beginning to see difficulties in passing the 1.2530/1.2550 range in the reaction process starting from the 1.21 levels. In this context, the GBP/USD parity, in which daytime indices begin to produce the first signal on the negative side rather than short-term indicators, is the first support level to be tracked at 1.2465, while the first resistance level at 1.2540 is antagonistic.
Unlike the many biggest parities in the global forex market, we could observe a negative trend on the USD/JPY parity in January. The starting point was at 117.14 level at the first day of new year and reached the 113 level at 24th January. In December, exports in Japan surged by 5.4%, well above expectations, while imports contracted by 2.6%. At the last days of the month, the Dollar was on the brink of recovering value losses at the beginning of the week against developed country currencies. Technically, when we examine the USD/JPY, it appears that it continues to maintain its movement in the descending channel. The pair is not too harsh in its downward movement but fails to break support for 112.70. On the other hand, the upward movement of the parity can be expected to lead to attacks on the resistance regions of 114.35/115.45 in the following periods.
- Date: 26 January 2017 Thu 10:12
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