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Strange movements on the market

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Amid lower liquidity we have noticed higher volatility, especially on the currency and commodity markets. The Antipodean currencies were the strongest in G10 for almost all day. The improvement in the commodities sector is one of the factors driving the high yielders rally.

The key figure was the third reading of US GDP today: Data was better than expected and showed lower decrease. Consumption remained unchanged, but PCE core inflation was higher than expected and recent release. Despite better data, dollar showed some weakness which strengthened after worse than expected existing home sales data from the US.

On the other hand, strong NZDUSD currency pair seems to have halted its advance after posting strong gains during the Asian session. The pair currently sits near the monthly highs and technical situation suggests a failure to hold onto gains. Additionally, milk futures have seen some decrease after recent milk auction in News Zealand. January futures indicate only increase of 50 USD.

Better GDP data for the US had strong impact on gold price. Gold dropped about 8 USD since the release of data.

Earlier we saw no change in the Turkish repo rate after the majority of analysts surveyed expected an increase. Markets expected a hike fairly unanimously following moves from United States and Mexico. Turkey was expected to fit into this trend to prevent lira depreciation and combat inflation. Lack of such move is a sign that the Bank is far from independent from Erdogan’s camp that is tightening its grip on power in the country. This cause a fairly rapid weakening in the Lira, however the currency has since pared back some of these losses.

Oil looks to set to finish higher for the first time in over week. On the other hand we have API report on inventories after the Wall Street session. Genscape indicates that inventories in Cushing rose 1,4 million barrels last week.

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