The year 2016 was full of important events. From the very beginning of the year 2016 lots important events were pending but by the end of the year, the global market has stabilized to a great extent. The green bucks gained its strength in the global market after the 8th November US presidential election. Mr. Trump becomes the next U.S president and declared that they are going to increase the fiscal spending and incorporate tax cut policy from the very beginning of the year 2017.Such an optimistic statement from the U.S government pushed the dollar higher against its all major rivals in the global economy. Things went further more positive for the U.S dollar since the long anticipated rate hike has been finally implemented in the global market in the last FOMC meeting minute.
The FED raise their interest rate on the basis of 25 points and this gave the U.S dollar the strongest of the year 2016.Upon the increment of the rate hike, the dollar index rallied up to 14 years high in the market causing the green bucks broadly stronger against its all major rivals in the global economy. However, things become a little bit smoky after the U.S dollar index slipped from its 14 years high in the market and became slightly weaker. Investors are thinking that the market has absorbed all the strength of the U.S dollar and the greenbacks might lose its strength in the global market. Despite such negative sentiment from the investors mind the dollar still remains broadly supported in the global market as FED might go for three rate hikes in the next year. Moreover, the central bank will also force the FED for at least two rate hike before the month of novemner2017 to adjust inflation rate of the government. But the FED will remain extremely cautious about their next rate hike since an immature rate hike will significantly weaken the dollar in the global economy.
The energy sector was also suffering from extreme bearish pressure in the global market as the price oil was sharply dropping in the market. But things become stabilized after OPEC put the production cap in oil production. They stated that they are going to limit the production of oil to 1.2 million barrels per day and such an optimistic statement gave the oil market a solid ground. The investors have not seen such a drastic steps from the OPEC leaders since 2008 and they are optimistic that the energy filled will be stabilized in the near term future since the supply will be limited. But after the crude inventories stock data release, the global economy was shocked to see that there has been an increase in the production oil in the U.S economy. Moreover, there were only 12 oil rigs in the U.S but by the end of the year 2016, they have 512 oil rigs which clearly represents that they increasing the supply of oil in the global economy.
Leading oil producing country like Iraq has already refused to cut their oil production since they think this is the key factor to improve their economic conditions in the financial world. The first proposal from the OPEC was to limit the production of oil to 2.1 million barrels per day and gradually reduce it to 1.2 million barrels per day. But surprisingly Iraq is producing 6 million barrels per day which clearly shakes the oil market in a negative way. But other leading oil-producing countries like Russia stated their vote of confidence on OPEC decision and they told that they will help to stabilize the energy sectors by limiting their production of oil.
Most of the traders are now out of the market due to the Christmas holiday and they are waiting for the next year beginning. After hitting the 14 years peak in the U.S dollar index the market has ceased it volatility leaving a strong bullish flavor to the green bucks. But the dollar is trading significantly higher in the global market and investors are thinking the green bucks will tumble in the financial world from the very beginning of the next year. But due to the three pending rate hike decision the dollar still remains broadly support and investors are in doubt about the next move of the mighty U.S dollar. The current U.S home sales and Consumer sentiment data show us that the U.S government has achieved the biggest economic expansion in the last three months. This caused the price of the yellow metal to sink in the global market.
The price of gold is measured in dollar the increase in the strength of dollar makes it hard for the investors to buy the gold. But after hitting the critical low the gold market exhibited strong bullish momentum upon the recent weakness of the U.S dollar. The Euro went up by 0.1percent and traded at $1.0446 after breaking the thirteen years low in the market. The Japanese yen pushed the dollar lower during the japan monetary policy meeting minutes but the dollar recovered its loss to a great extent and gain 0.2 cents in the market. The current bench market of the U.S treasury yield was significantly down by 1 basis point on last Thursday at 2.543.To be precise with the sudden drop of the U.S index the whole market sentiment is now doubting about the strength of the U.S dollar. The mixed sentiment is strongly prevailing in the global market as traders wait for the next year opening.