The end of the month, quarter and semester brought considerable buying flow of US dollars

The end of the month, quarter and semester brought considerable buying flow of US dollars

Investment portfolio adjustments started unusual volatility

But not all the causes of this purchase of dollars can be based on portfolio adjustments. In addition to this, the economic figures that were published were highly supportive of the dollar.

The ADP private employment survey surprised with the 692k figure compared to the 600k expected. This reading becomes important when there is a different number than expected because the market takes it as a precedent of the prominent employment figure published the next day. If the latter also surprises in the same direction, it could have a high impact on financial assets, especially on the US dollar.

Real estate

On the other hand, the real estate market figures - pending homes sales - showed a considerable increase of 8% in May from just a drop of the -0.8% expected. The real estate market is one of the sectors experiencing a more significant recovery in the US economy after the crisis, low-interest rates, and excess liquidity provided by fiscal and monetary stimuli. The measures are enormously boosting this sector of the economy, this being reflected in the recently published data. Thus, there is still no excessive concern regarding the creation of a new real estate bubble. If it remains at this trend rate, it could impact monetary policy decisions and, therefore, the price of financial assets.

US Dollar

Following the latest economic metrics, the US dollar has once again reached new highs in recent months, reflected in the USD/JPY pair, with levels not seen since the end of last March. However, a reaction of the US bond yields, with which they have a high and positive correlation, has not been signaled after the data got published.

GráficoDescripción generada automáticamente

Technically, it has surpassed the recent highs at 110.95. A close above these levels opens the way towards the primary resistance zone where the longer-term downtrend would be terminated, around 112.25.

Today, the market will be awaiting the OPEC+ meeting to determine the decision of the oil-producing countries on increasing production. The market expects figures to range between 500k and 1M BPD (barrels per day). Everything will depend mainly on Saudi Arabia. Meanwhile, the market continues to be bullish, even more so after the United States crude inventory figure was published yesterday. The reserves had an unexpected fall to 6.7 M barrels compared to the 4.6 M forecasted.

Gráfico, Gráfico de líneasDescripción generada automáticamente

Sources: bloomberg.com, reuters.com

This information/research prepared by Miguel Ruiz (“the research analyst”) does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.

The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.

The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.

JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors