On Monday the stock markets ща America showed a weak positive trend and closed in green zone. Dow Jones industrial average added 0.03% (21012.28), S&P 500 remained at the level of the last session with of change 0.00% (2399.38), the Nasdaq rose 0.03% (6102.66). European stocks had not shown a single dynamics and closed mixed. The German DAX lost 0.18% (12694.55), British FTSE 100 grew by 0.05% (7300.86).
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 retail sales in Australia in March
At 15:30 MSK building Permits Canada for March
At 16:00 MSK FOMC member the Kashkari
At 17:00 MSK the Number of open vacancies on the labour market in the USA JOLTS job openings for March
At 20:00 MSK FOMC member Rosengren
At 23:15 MSK FOMC member Kaplan
As expected, major equity markets around the world have not demonstrated volatility after the elections in France. The new President was a centrist Emmanuel Macron, the leader of party "Forward!", he had got of 66.06% of the vote. His rival on the second round of Marine Le Pen's from party National Front gained two times less 33,94%. Thus, France supported the unity of Europe and the stay of the country in the European Union. This outcome was already incorporated in asset prices on the actual implementation it was possible to observe only the closing of speculative positions that stopped a rise at the markets further.
The result of the French election may largely predetermine the elections in Germany. The current trend in the development of European geopolitics can contribute to the acceleration of economic development of the region. The result of the European Central Bank will be inclined to curtail monetary stimulus and asset purchase from the market. In the near future it can be expected a decline in interest in protective assets and rising risk appetite.
The European currency continued its correction on Tuesday, retreating from highs of November 2016. EUR/USD pair found support at the level of 1.09. It is likely the continued development of the correction on the background of growing expectations of interest rate hikes on the June meeting of Fed and as a consequence the strengthening of the dollar may be followed. Probability of this event hiked up to 80 % this week; it was 63 % last week.
On Tuesday the head of the Bank of Japan Haruhiko Kuroda said that he expects to achieve the inflation target of 2% next fiscal year in case if the Bank of Japan will continue the current policy of monetary easing and will keep rates at current levels. After this statement the pairs EUR/JPY and USD/JPY continued its upward movement.
There is a relative balance in the oil market for the second day. The parity of growth factors and pressure helps prices to stay at current levels. Yesterday, the Minister of energy of Saudi Arabia Khalid al-falih said that the Vienna agreement may be extended for a term greater than the end of the year. This initiative was supported by Russia, one of the largest producers of "black gold". But these statements are not sufficient to turn the downward trend.
Sincerely, Global FX chief analyst Sergey Melnikov.