Stock indices of America yesterday continued upward rally. Dow Jones rose by 0.33% (19614.81), S&P 500 up by 0.22% (2246.19), Nasdaq up 0.15% (4859.19). European stocks have maintained an upward trend. The index of Frankfurt stock exchange DAX rose by 1.75% (11179.42), London's FTSE 100 grew by 0.42% (6931.55).
Today it is expected several publications of macro-economic data that will attract investors' attention during trading session.
At 10:00 MSK German Trade Balance for October will be published, expected figure 21.5B.
At 12:30 MSK in UK Trade Balance for October will be published, expected figure -11.80B.
At 18:00 MSK in USA Michigan Consumer Sentiment for October will be published, expected figure is 94.5.
At 21:00 MSK U.S. Baker Hughes Oil Rig Count will be published.
The ECB meeting and press conference of Mario Draghi was a key provider of news yesterday. Decisions were taken not unambiguous; on the one hand, the regulator confirmed investors’ expectations of the extension of the asset purchase program before the end of next year. On the other hand, the ECB has puzzled investors because from April, the volume of buyback is reduced from 80 to 60 billion euros per month. Also, the regulator kept its key and deposit rates unchanged at 0.0% and 0.4% respectively. Mario Draghi tried to downplay news about the decline of buyback volumes, saying that if required by the economic situation, the volume may again be increased and the duration of the program prolonged. As a result, the Euro exchange rate rose sharply and also sharply declined. Volatility in the EUR/USD pair strongly increased in time, the values reached 1,087. The pair is now again committed to its local minimum values in the region of 1.05. Shortly before the meeting of the Fed we can expect sideways movement in the range of 1.05 to 1.08.
Yesterday's statistics of the number of initial claims for unemployment benefits showed a reduction to 258К, which was well within analysts' forecasts. Such a low level does not falter the confidence of investors in the increase the key rate by the Fed on December 14.
As expected, the index of wide market S&P 500 yesterday reached its local technical levels, where it may get pause for consolidation or correction. The Fed meeting might be the reason of continue of the increase next week.
After two days of correction, oil prices continued to rise yesterday. Increasingly less time remains before the final fixation of the agreement by the OPEC countries+ at weekend this week. And yet, there was no reason for strong doubt that the agreement still held. Despite the fact that some of the speculators already took profit, the growth potential still remains. From a technical point of view, quotations of oil close to the known continuation pattern. If upward movement will continue the technical target is in the range of 77 to 82 $ per barrel for WTI oil, and that sounds while not entirely realistic now.
Sincerely, Global FX chief analyst Sergey Melnikov.