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Equities Dollar Gain, Commodities Retreat

Posted by Joseph Trevisani on Jul 22, 2016 6:19:13 PM

American equities rose on Friday, pushing the S&P 500 Index to a record, the dollar firmed against its major counterparties and commodities waned as the European Central Bank and the Bank of Japan declined this week to add to their economic stimulus programs. 

The S&P closed at 2175.03 up ten points from Thursday's finish and two points over the previous record set on Wednesday. It was the fourth straight weekly gain for the index.

The dollar climbed against the euro and the pound and ended above 106 versus the yen for the fourth finish there this week.  Sterling was hurt by PMI reports from Markit Economics, the first statistics since the vote to leave the EU, which showed business activity in both the manufacturing and service sectors slowing to contraction in July.

Commodities from oil to copper slipped as the rising dollar changed the terms of trade. The Bloomberg Commodities Index closed at 84.6352, its lowest since May 24th and sixth daily loss in a row. WTI dropped below $44.00 in intra-day trading, only the second time in two and a half months the U.S crude standard has fallen that low. It closed at $44.19 its weakest since May 5th losing 3.8 percent on the week. The U.S. has ample gasoline and crude oil supplies as it heads into the final month of the summer vacation and driving season. 

Gold had its first consecutive weekly declines in two months as soaring equity markets, a resurgent dollar and falling volatility undermined the metal's safety play. Gold closed at $1322.73, down $11.36 on the day. The metal is off 3.8 percent from its July 11 top at $1375.34, though it remains 24.6 percent higher on the year. 

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Bloomberg

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