23/07/2018 08:01 AST

All eyes will be on the dollar this week as US President Donald Trump’s trade war turns into a currency war. Trump called out China and Europe Thursday and again on Friday for manipulating their currencies and keeping them low against the dollar.

The dollar index, which measures the greenback against a basket of currencies, has lost more than a per cent in value after Trump’s comments on Thursday. Analysts expected it will continue to weaken in the coming weeks.

“We expect the dollar to weaken a but after Trump comments. We see a short term blip for a week or two,” a currency analyst, who did not wish to be named said. He expects the euro to trade at 1.19 and the yen at 110 against the dollar within a fortnight.

The dollar index fell 0.72 per cent to 94.48 to close last week’s trade. The index has gained 2.55 per cent so far in the year, but still traded 1.2 per cent lower than the 52-week high of 95.65 seen last month.

Along with the currencies, equity markets will also be looking at second quarter earnings for leads, which may be supportive. The Dow Jones Industrial Average closed at 25,058.12, down 0.03 per cent, after rising 0.15 per cent last week. The S&P 500 index closed 0.09 per cent lower to 2,801.83, ending a flat week.

“Equities markets are also expected to rally from current levels as earnings from key sectors, including energy, are released. S&P 500 companies are expected to record their second strongest pace of earnings since growth since 2010, with key releases from companies such as Microsoft leading the way already this past week,” Vaqar Zuberi, Head of Hedge Funds at Mirabaud Asset Management said.

Positive

According to Emirates NBD, with nearly 17 per cent of S&P 500 companies having reported earnings, 87 per cent of those have reported a positive EPS surprise and 77 per cent of those have reported a positive sales surprise.

“With Trump continuing with his habit of tweeting randomly about issues including monetary policy, trade and currency manipulation, it is becoming hard for investors to remain sanguine and pay attention to the positive earnings story. This is likely to breed uncertainty in financial markets leading to high volatility,” Aditya Pugalia, director at Emirates NBD said in a note.

Crude prices in bullish mode

Brent crude prices are likely to recover partly after losing more than 3 per cent last week. On Friday, Brent crude rose 49 cents to $73.07 per barrel, while the West Texas Intermediate closed 0.03 per cent higher to $68.26. “The combination of supportive comments on supply from Saudi Arabia last week and a drop in the rig count announced Friday will keep crude oil prices in a bullish mode for the upcoming weeks,” Zuberi from Mirabaud Asset Management said.

Saudi Arabia said it will keep exports steady this month and reduce them by 100,000 barrels a day in August. Brent prices likely to reach the upper end of the recent trading range between $73-77 per barrel, Zuberi added.


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Ticker Price Volume
WALAA 20.90 156,306
SAICO 10.80 239,189
QNBK 183.41 314,625
APPC 47.90 363,668
KAYAN 15.50 7,407,695
SARCO 36.60 378,482
SCCO 29.40 226,795
US Dollar 1.00
Saudi Riyal 3.76
Derham Emirati 3.67
Qatari Riyal 3.65
Kuwaiti Dinar 0.30
Bahraini Dinar 0.38
Omani Riyal 0.39
Euro 0.85
British Pound 0.76
Japanese Yen 111.40
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