Equity markets started off the week on a lacklustre note, and the absence of important news flows encouraged dealers to exit the equity markets. 

Europe

Investors knew market volatility would be low as the US and Canada celebrate public holidays, and that weighed on enthusiasm in this part of the world. Dealers decided to lock in their profits from week. Whenever a major player like the US is on holidays, the thin volumes can lead to exacerbated moves, which are unlikely to be a true reflection of the market.

Reckitt Benckiser posted a 2% rise in group sales in the fourth-quarter, but analysts were anticipating a rise of 2.1%. Company sales were actually flat when remove the sales that were attributed to Mead Johnson, a company they bought out. Previously the company predicted it would make saving of $250 million in relation to the Mead Johnson takeover, and now it predicts the savings will be $300 million. The company foresees like-for-like sales growth of between 2-3% this year. The share price is down 6.9%, and it fell to a level not seen since February 2016, and if the decline continues it might target 6000p.

Rightmove released their latest house price data, and it shows that average UK house prices increased by 0.8%, and that was an improvement in the previous reading of 0.7%. The average monthly growth rate over the past ten years is 1.6% so the growth rate is clearly cooling. The property specialist also stated the London property boom is over, and that sellers should temper their expectations when it comes to the asking price. Berkeley Group are in the red as they are the most London focused home builder of the bunch.   

US

The New York Stock Exchange is closed today as the US celebrates Presidents Day.

FX

The US dollar index experienced low volatility as American traders were off today celebrating Presidents Day. The greenback has come under major pressure recently, and it fell to a new three year low on Friday morning, before having a bounce back. Firm PPI data and robust housing figures from the US last week adds weight to the argument the Federal Reserve should hike interest rates four times this year, but the greenback is still in a downtrend.

GBP/USD will be in focus this evening as Mark Carney of the Bank of England is due to give a speech at 6.45pm (UK time). The most BoE meeting was more hawkish than expected and there is chatter there will be an interest rate hike in May. The update told us that interest rates will be hiked sooner than initially suspected. Dealers will be listening out for any possible clues about future momentary policy.

EUR/USD has taken a knock as the greenback is firmer. The single currency hit a fresh three year high on Friday and now we have seen some profit taking on the euro. There were no import economic accoutrements today from the eurozone, but tomorrow traders will be keeping an eye out for German PPI and the ZEW figures tomorrow. The German economy is improving and since the country is so influential in the eurozone, solid economic reports could send the euro to new three-year highs.  

Commodities

Gold is under a small bit of pressure as the firmer greenback is taking the shine off the metal. Lately the negative correlation between the metal and the US dollar has been strong, and the commodity hasn’t benefitted from the flight to quality factor. Market movements have been small due to the US holiday.

WTI and Brent Crude oil are continuing to bounce back. The energy market fell to a two month low last week and it in pushing higher for the fourth day in a row. The news that US oil production hit a record high recently prompted dealers to lock in profits, and the oil market is still in the same upward trend it has been in since June.

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