American stock markets showed a negative trend yesterday and closed in the red zone. The Dow Jones fell by 0.29% (20591.86), S&P 500 declined by 0.38% (2344.93), the Nasdaq fell to 0.52% (5836.16). European markets closed mixed. The German DAX climbed 0.13% (12154.70), British FTSE 100 fell by 0.22% (7348.99).
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 04:30 MSK the PMI Australia
At 09:00 MSK the consumer price Index (CPI) of Germany in March
At 12:00 MSK Monthly report, the IEA
At 15:30 MSK Base the producer price index (PPI) of the USA for March
At 15:30 MSK the Number of initial applications for unemployment benefits USA
At 17:00 MSK the Index of consumer sentiment from the University of Michigan in April
At 20:00 MSK the Number of drilling rigs from Baker Hughes
On European markets low volatility continue to be with pressure from sellers. Buyers are not increasing their positions in the shares due to geopolitical risks. There is also a wariness about the election results in France. The first round starts April 27 and not the most desirable candidate Marine Le Pen increases chances of the background of the terrorism threat.
For the American market, the main driver yesterday was the statement by Trump in an interview for "The Wall Street Journal". The President said that the dollar is "too strong" and that he would prefer that the fed would keep interest rates at a low level. He reiterated his view that a strong currency hurts the competitiveness of the United States. As the result the American currency has made a confident step down, reversing the trend to strengthen. Factors that can improve a dollar may be expected from Fed to tighten policy, but this is unlikely to happen in the near future. Now the probability of a rate hike in May is 5%, and in June more than 65 %. Today investors will start to evaluate the results of earnings reports.
Geopolitics remains the subject of attention of market participants. After Pyongyang threatened the United States with a nuclear strike, Trump responded by sending warships to the coast of the Korean Peninsula. Investors insure against risks by transferring some positions to defensive assets, that is why upward trend in gold remains.
After a long recovery, oil prices were close from the achieved position and confirmation from EIA about the inventories reduction did not contribute to continued growth. EIA also reported the possible achievement of record production in the United States of 9.9 million barrels per day by 2018. Today will be published data of the number of drilling rigs from Baker Hughes.
Sincerely, Global FX chief analyst Sergey Melnikov.