Stock indices of the world markets showed mixed dynamics at the end of last week. The Dow Jones declined by 0.11% (19170.42), the S&P 500 rose by 0.04% (2191.95), Nasdaq increased by 0.09% (5255.65). European stocks declined, Germany's DAX dipped by 0.20% (10513.35), British FTSE 100 slid by 0.33% (6730.72).
Today it is planned a number of events and publications macro-economic data that could affect investors' decisions during trading sessions.
At 12:30 MSK in U.K. will be published Services PMI for November, expected level 54.0.
At 12:00 MSK EU Finance Ministers Meeting.
At 16:30 MSK FOMC Member Dudley Speaks.
At 17:00 MSK ECB President Draghi Speaks.
At 18:00 MSK in U.S. will be published ISM Non-Manufacturing for November, expected level 55.4.
At 20:00 MSK Bank of England (BOE) Governor Mark Carney Speaks.
At 22:05 MSK FOMC Member Bullard Speaks.
European stocks dropped last week ahead of the Italian constitutional referendum, which was initiated by Prime Minister Matteo Renzi, and took place last Sunday. Investors minimize risks, closing positions before the weekend. Fears of market participants were not in vain. Almost 60% of citizens voted against the constitutional reforms. Prime Minister Matteo Renzi has seen the reforms as the main vector of development of a country which said "no" to them. After such a failure, Renzi said he will resign this week. Stock markets reacted negatively to these events. The European currency dropped sharply, reaching a low of the last 20 months. EUR/USD opened with a gap down and reached a new local minimum 1,0505. The situation in Italy could destabilize the situation in the European markets and have a negative impact on the banking system of Italy.
In the U.S. statistics of non-farm payrolls has not brought special surprises, the value was close to the expected number. The unemployment rate has reached the minimum values for the previous 9 years, 4.6%, and was better than expected. Markets showed no any volatility during the publication of data that clearly fit into the expectations of investors by raising the key rate of the U.S. at the December meeting. The probability of this event is now estimated as 100%. Also high probability of continue increasing of rates in February, it now is over 90%. Such expectations contribute to a further increase in risk appetite, strengthening of the dollar and out of defensive assets such as gold.
This week one of the most important events will be the ECB meeting on Thursday, which will be announced a decision on monetary policy, after that press conference with ECB President Mario Draghi will follow by.
Last week, futures for WTI was close to yearly highs, but was unable to repeat them. Apparently the euphoria after reaching an agreement at the meeting of Vienna began to subside. This week, on the meeting of OPEC countries+ planned final formalization of the agreement on the reduction of oil production. Meanwhile, Baker Hughes on Friday once again reported about increase in rig count that signaled the continuation of the manifestations of the activity of shale oil manufacturers. In the nearest couple of days it is possible the consolidation of prices at current levels.
Sincerely, Global FX chief analyst Sergey Melnikov.