Interest in risk is still fueling the upward trend in the stock markets and reduces the demand for defensive assets. However, the enthusiasm of bulls is gradually dying out and it was well felt today at the Asian trading session, where the stock indices showed mixed dynamics, and futures for European and American indices also went to the red zone altogether.
The dollar and gold are also getting cheaper. The precious metal lost 0.1% in the morning and is now selling at 1330.71 dollars per ounce compared to Friday’s maximum at 1357 dollars. The US currency is losing ground across the entire spectrum of the market, including against the Japanese yen. Strengthening of the yen against the background of a decline in yield on state. The US bonds are the first sign that interest in risky assets is beginning to decline.
The Australian dollar can not decide: up or down?
The Australian dollar is still trying to gain a foothold above 0.80. The data on consumer confidence published today proved to be better than expected and supported the currency, but they were not enough for a full-fledged catalyst for the upward movement. In fact, it is important to understand where the money comes from. If this revival is funded by debt, the Reserve Bank of Australia is unlikely to be delighted. The regulator has long been concerned about the debts of households, because they greatly impede the implementation of monetary policy: lower the rate – the bubble will be even more inflated, raise – it will burst and look with unpredictable consequences.
In general, the Australian economy is still not simple, so traders prefer simple and understandable guidelines: interest in risky assets, rising prices for raw materials (especially iron ore) and the state of affairs in China. All three factors are now favorable for the Australian currency, but the report on the labor market looming on the horizon does not allow it to disperse.
According to forecasts, in August the Australian economy created 20 thousand new jobs, which is very favorable and indicates a stable tightening of labor market conditions. However, the Australian dollar will grow only if the indicators are significantly higher than the forecasts, and then, given the volatility of this series of statistics, the reaction is likely to be short-lived. From a technical point of view, the local resistance passes in the area of 0.8066 – this is the maximum on June 27. An unsuccessful attempt at a breakthrough on positive labor market data may provoke a deeper correction with a medium-term target at the level of 0.7895, which will indicate the formation of the peak.
The pound flew off the brakes and will grow at least until tomorrow
The report on inflation in the UK still served the bulls for the pound. The currency yesterday increased by more than 100 points and today since morning it is already trying to gain a foothold above the 1.33 mark – for the first time in the last twelve months. Hopes for an increase in the rate at the next meeting of the Bank of England – that is, this Thursday – did not increase, but investors are clearly tuned to a more aggressive attitude of the regulator. Perhaps, this time, three people will vote for the promotion. In this case, the pound ranks even higher. However, before this we still have to survive the report on the labor market.
Last month, the unemployment rate fell to 4.4%. According to forecasts, in August the indicator will remain the same or even fall to 4.3%, taking into account the improvement of the mood indicators in business and among consumers. Good, but not the main news, when it comes to the labor market. The most important thing, as always, is the growth rate of wages, as it not only points to inflationary processes, but also reflects the future dynamics of consumer activity. According to forecasts, in July the average weekly income grew by 2.3% compared to the growth of 2.1% in the previous period. If the expectations are met, the pound will receive another reason for growth before tomorrow’s meeting of the Bank of England’s Monetary Policy Committee.
Oil is getting cheaper after yesterday’s rally
Prices for Brent crude oil fell by 0.15% to 54.22 dollars, while the WTI barrel fell 0.3% to 48.74. So far, this dynamic looks like a correction after yesterday’s growth, triggered by news about a decrease in production in the OPEC countries for August, as well as the fact that the cartel is considering the possibility of extending the term of the agreement. According to API, oil reserves in the US rose by a record 6.8 million barrels, and this news certainly increases the pressure on prices. Today, the Ministry of Energy’s official report on reserves will be released, and if it confirms API performance, prices will rush to the lower limits of short-term ranges, despite the fact that this increase is clearly temporary and due to the consequences of hurricanes.