On Tuesday, the stock indices showed a single moderate upward dynamics and closed in positive. The Dow Jones rose by 0.26% (21865.37), S&P 500 added 0.08% (2446.30), the Nasdaq rose 0.30% (6301.89). European markets were down in the single dynamics and closed in negative territory. The German DAX fell by 1.46% (11945.88), British FTSE 100 slipped by 0.87% (7337.43).
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 the building Permits in New Zealand in July
At 02:50 MSK the Volume of retail sales in Japan in July
At 04:30 MSK Completed Australian construction works for the second quarter
At 04:30 MSK speech by the Chairman of the Reserve Bank of New Zealand Wheeler
At 10:00 MSK the Index of leading economic indicators KOF in August
At 15:00 MSK the Index of consumer prices in Germany in August
At 15:15 MSK the unemployment rate in the non-agricultural sector of the USA from ADP for August
At 15:30 MSK the U.S. GDP for the second quarter
At 16:15 MSK FOMC member Powell speaks
At 17:30 MSK crude oil Inventories USA
At 17:30 MSK the Data on excess reserves of oil in Cushing (Oklahoma)
Now there is a tendency for increased volatility in stock and currency markets in early autumn. This is due to the persistence of geopolitical tensions and uncertainty of future plans of the fed and the ECB on the development of monetary policy. A recent speech at the Jackson Hole of the heads of regulators of major economies gave rise to more questions than gave answers about the further steps of reduction in fed's asset and cutting the QE program by the ECB. Comparing the news background over borders of the official statements of the monetary authorities, the leader in the negative by a large margin is America with a constant tension that is created around the President of Donald Trump. That is creating pressure on the exchange rate of the national currency. Thus, the Euro continues its rally started in the beginning of this year. Yesterday, the pair EUR/USD has broken the important level of 1.20, and is still in consolidation, and signs of reversal to the correction is not yet shown. Against this background, the stock market indexes of the Old World left in a noticeable drawdown.
A major factor in the complications of geopolitical situation was another test of the North Korean ballistic missile that flew over Japan and fell into the Pacific Ocean. While remembering previous similar cases, the market reaction now can be assessed as much restrained. The American market did not want to show pessimism after opening with a strong gap down, buyers pulled quotes up. Perhaps, market participants still do not fully take into account the negative which can be played later. Also the weakening of dollar and statistics helped to buyers. The consumer confidence index in August amounted to 122,9 points that is better than the forecast of analysts, which was at 120,3 points.
The current situation could cause a surge in demand for protective assets. Gold prices confidently struck $1,300 per ounce and came to the annual maximum, while maintaining a rising trend.
Last night it was published the data of oil inventories in the United States, the change was strongly negative of 5.780 M, which is much higher than expected 1.500 M. Despite this, oil continues decline. The main factor is the weakening of dollar and the impact of hurricane Harvey, after which 16% of the refineries in the US stopped, reducing demand. Today it is expected the official data on inventories.
Sincerely, Global FX chief analyst Sergey Melnikov