Review of trades. Financial markets go into FOMC standby mode

Trump threatened to erase North Korea from the face of the earth, but no one was scared

Yesterday’s speech by Trump at the United Nations on the nuclear program in North Korea was not a revelation. The president compared the policy of Kim Jong-un to suicide and habitually promised that he would regret this much. “If we are forced to defend ourselves or our allies, we will have to destroy North Korea … The United States is ready for such measures and can implement them, although we hope that they will not be required,” Trump said. However, there was no specifics on this score, and the market was already used to air shocks. In addition, Pyongyang is still silent, so investors are showing reasonable caution, but they still do not find sufficient grounds for escaping from risks.

Asian stock indices showed mixed dynamics, despite the next records on Wall Street (Dow Jones Industrial Average yesterday, updated a maximum of 22370.80, Nasdaq also grew slightly to 6461.32). Regional factors and some anti-risk sentiment led to a decline in the Australian S & P / ASX 200 and South Korean Kospi Composite by 0.3% and 0.1%, respectively. Japanese Topix by the middle of the day went to zero, and Hang Seng rushed all day, but eventually grew by 0.1%. Futures on the S & P 500 are traded unchanged in price relative to yesterday’s close, which indicates a total decrease in volatility before today’s meeting of the FOMC, the outcome of which will be announcement of the decision on the rate.

The dollar is waiting for the FOMC meeting in the red zone

The currencies keep Olympic calm, although the dollar is slightly losing ground across the entire spectrum of the market. The USD index has lost 0.1% since morning, without leaving the narrow range. The highest activity is observed in pairs with the franc, the yen and the Australian dollar. European currencies are also growing slightly, even the pound is trying to grow, albeit without much enthusiasm. An exception to the general trend was the New Zealand dollar, which dropped 0.14% after an unsuccessful attempt to break through resistance at 0.7340.

The Australian dollar is again above 0.80 – thanks to the minutes of the RBA meeting – but to make further progress, it has no reason. Iron ore continues to ruthlessly cheapen (today since morning, prices have fallen below $ 70 per ton for the first time since July this year), and interest in risk is dying, increasing pressure on commodity currencies. On the other hand, the relative determination of the RBA and the positive economic statistics for Australia do not give the currency much fuss. That’s circling the Aussie / dollar near the enchanted level 0.80 which is a day in a row.

The dollar / yen formed a short-term top in the area of ​​111.88. Now the pair is corrected within the overall downward dynamics of the dollar. The yen has not responded for a long time, therefore everything depends on the outcome of the FOMC meeting and the yield on the state. bonds of the USA. If the Fed will manage to convince the markets of its willingness to raise the rate in December (which is unlikely), the dollar will grow and not only against the yen, but the reaction. most likely, will be short-lived. Japanese Prime Minister Shinzo Abe recently surprised everyone with the intention of announcing an early election, and today he suddenly decided to abandon the goal of achieving a primary budget surplus by 2020. Probably, the Premier is preparing to spend some money before the election. For the yen, this is not so important, although, theoretically, it can mean the strengthening of the accommodative policy of the Bank of Japan. Now the dollar / yen is trading at 111.46 with a decrease of 0.12% relative to yesterday’s close.

The Euro / dollar grew by 0.16%, continuing to master the territory above 1.20 (current rate 1.2010). The currency strengthens for the fifth consecutive day and may return to the highs of early September, if the decision and the accompanying comments of the FOMC appear to the market not sufficiently aggressive. Recall that now investors are laying down an announcement about reducing the balance in the price, but they do not believe too much in the December rate hike (most likely, the regulator will state that it will be guided by incoming data). Given the unstable geopolitical situation and the devastating effects of the two hurricanes, such an outcome is more than probable. It will lead to a weakening of the dollar across the entire spectrum of the market, but will not cause a large-scale reaction, since all this is already more or less embedded in prices. But any deviation from the planned course of the market can lead to greater volatility.

Oil consolidates near recent highs

Oil continues to consolidate near the highs reached at the end of last week. The Brent variety has fallen 0.1% this morning and is now selling at a price of 55.32. For a barrel of oil, WTI is given $ 50.20, which is also 0.1% lower than yesterday’s closing level. Data on reserves, published yesterday by the American Petroleum Institute (API), showed the growth of crude oil, but the reduction of gasoline and distillates, which in general was perceived positively by the market. If a similar report from the Energy Ministry also shows an increase in inventories, the downward pressure on prices may intensify, but all within the framework of a healthy correction. It should be noted that the oil refineries affected by Hurricane Harvey are gradually returning to work and increasing demand, but the recovery process is not yet complete, which means that in the near future the growth rate of reserves will decrease or even go to the negative. In addition, OPEC countries are discussing the possibility of extending the agreement on reducing production volumes, not letting prices fall too much.

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