ETF Securities Research Blog

Is the Canadian Dollar signalling an oil price bottom?

The Bank of Canada (BOC) raised rates for the first time in seven years this week, the second major central bank to do so after the Federal Reserve. The BOC indicated that its economy ‘is approaching full capacity’. As a result, the Canadian Dollar, the so-called Loonie, jumped to the highest level against the US Dollar in 13 months. A rising CAD could be signalling a bottom for oil prices. Read more…

Cryptocurrencies are the new Gold rush

Cryptocurrency miners are a fickle group, flipping from one currency to the next depending on their ability to mine it cost effectively. Mining has been proving lucrative for them, but as a consequence prices of tools used in mining cryptocurrencies are soaring, similar to the gold rush seen in the 19th century.

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Further unnecessary political uncertainty and sterling volatility

The promise of ‘strong and stable leadership’ has bred more unnecessary political uncertainty and sterling volatility. With a tough Brexit process now likely, Theresa May could lose her job or be forced into a drawn out process to agree a coalition. This, and a lack of political unity in parliament is also likely to weigh on upcoming Brexit negotiations which are due to begin in 2 weeks’ time.

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Recent events highlight investor’s appetite for safe havens

In the run up to a FED rate hike gold prices are typically weak, but so far this year gold has risen 12%, with one rate hike already and likely another next week. This year gold ETPs have globally seen inflows of US$4.6bn, only one quarter of what was seen in 2016 but in some ways these inflows are surprising given the threat of further rate hikes.

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Oil prices fall as OPEC has no positive surprise up its sleeve.

OPEC and its non-OPEC partners have agreed to freeze production at current levels for another nine months. Current production levels are approximately 1.8mn barrels per day lower than they were in October 2016, if the output figures are to be believed. The market has been led to believe that this would be the likely outcome from the meeting after the major players had already announced that a nine-month extension was palatable. With the market conditioned to expect surprises emerging from the “smoke and mirrors” format of OPEC meetings, the result of the current meeting has been an anti-climax. Read more…

OPEC’s choices: double down or do nothing

OPEC’s current strategy is not working. Oil prices have given back nearly all their gains since the cartel agreed to cut production in November 2016. We believe the credible options for their next move, to be discussed at their May 25th meeting, will be to either to cut deeper or let the deal collapse. The latter option seems the most likely outcome.

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Frexit less likely but domestic challenges

Market’s participants welcomed the lead of Macron in the first round of the French presidential elections. The euro jumped 1.3% and French equities are up 4% led by French banks. We believe the excessively high OAT-Bund yield spreads will continue to tighten gradually as we get closer to the second round of the presidential elections and the Parliamentary elections. Read more…