During the last trading session of the previous week the stock markets of America have not shown uniform dynamics, and closed mixed. Dow Jones grew 0.06% (21797.79), S&P 500 dipped 0.15%(2461.43), the Nasdaq fell by 0.59% (6360.19). European markets were also mixed. The German DAX grew 0.06% (12303.98), Britain's FTSE 100 sagged 0.26% (7377.60).
Today it is expected a few publications of the macroeconomic data and the speeches of the monetary authorities that could affect investors' decisions during the trading sessions.
At 01:45 MSK retail sales on electronic cards in New Zealand in August
At 07:30 MSK the Index of business activity in the services sector of Japan
At 10:00 MSK a Speech by ECB member, Coeure
At 15:15 MSK the Volume of construction of new homes Canada for August
There is the decline of risk appetite among the global markets participants, thus there were no any strong movements in high volatility in recent times. Macroeconomic data on Friday also were not given the reason for this. Production in the processing industry in the UK grew by 0.5% in July, which is not much higher than the expected 0.3%. Although the indicator grew for the first time in six months. Japan's GDP continued to fall, showing for the second quarter to 2.5%, but it's not much worse than expected 2.9%. Wholesale sales fell by 0.1% in America, it is worse than the expected increase, while inventories in wholesale trade rose 0.6% which is more than forecast 0.4%, this may say about a decrease in demand in the country.
The main driver for global markets at the end of last week was the expectation of new nuclear weapons test by North Korea on weekend. So investors didn't want to risk and reduced positions in the dollar and increases in defensive assets, gold and the Japanese yen. Market participants showed increased caution, on background of which, the indices of the S&P 500 and Nasdaq closed the trading session in negative territory. But instead of weapon test North Korean leader decided to celebrate the founding of the state, and not to launch new missiles. That is why foreign exchange market opened with large gaps in favor of the dollar, which rose against all other currencies. While it is likely that the strengthening of the American currency will continue.
The second factor which influenced to investors' decisions now are natural disasters. Investors remained cautious due to the possible economic effects of the second hurricane "Irma". On Saturday it raged along the coast of Florida, leaving without electricity up to 3 million homes and offices across the state.
Gold rises for the third week, though the growth noticeably slowed down. It was amounted up to 1.6% during the last five days. The main reason is geopolitics, and natural disasters. But in the context of expected mitigation of this factor impact gold opened with big gap down this week.
Negative impact of natural disasters reflected in the black gold cost. Oil prices dropped on Friday after low speed of refineries recovery in Texas, which leads to a decrease in demand. Also effect of the hurricane "Irma" was exaggerated, because it bypassed the oil producing areas of Texas, and came to Florida. However, the weekly growth of the "black gold" price was 0.4%.
Sincerely, Global FX chief analyst Sergey Melnikov