Asian stock indexes recovered after the unsuccessful beginning of the week, the currency stabilized, Brent crude was fixed above $ 62 per barrel in anticipation of the OPEC meeting at the end of the month.
Correction from overbought levels on Asian sites was fleeting. Topix, pretty much sagged yesterday, today again went into a plus and, having added 0.9%, reached weekly highs, with a positive trend was noted in all sectors except health. Hang Seng in Hong Kong grew by 0.7%, while Chinese Shanghai and Shenzhen Composite added 0.6% and 0.7% respectively. S & P / ASX 200 showed more modest dynamics, but also went into a plus (+ 0.3% in the morning trading).
The euro hovered in indecision
The foreign exchange market calmed down after a shake-up on Monday, with, as expected, no panic due to the collapse of the “Jamaican coalition” in Germany did not happen. The euro fell in the morning yesterday by 0.7% on that and calmed down. Even Draghi’s cautious comments that inflation is not yet credible, and the Eurozone economy still needs incentives, could not effectively motivate bears on the euro.
Today, the currency does not show any intention to fall below the local support 1.1720 / 00 and even tries to recover. The economic calendar in Europe today is pristine. Closer than the American session in Frankfurt, a speech on the fiscal union will be made by a member of the Board of Governors of the ECB Benoit Ker, but the likelihood that he will say something that can move the market, tends to zero. Even Draghi failed yesterday. This means that the dynamics of the single currency will continue to be determined by technical factors and a bit of politics. Since she managed to gain a foothold above the support mentioned yesterday, there will not be a landslide fall to the November lows. At least not now. Considering aggravating circumstances in the form of holidays in the US and reduced liquidity, we can assume that this week the currency will settle in the range with the upper limit of 1.1790 / 1.1800.
Yellen decided to leave
The head of the Federal Reserve, Janet Yellen, announced that she would leave the board of directors after her seat was taken by Jerome Powell. Thus, Trump will have another – already the fourth – free space and the opportunity to put on him “his” man. Most likely, they will have a man who adheres to the same cautious views as Powell, which will give FOMC’s “pigeons” a tangible advantage. For the dollar, this is rather a minus, but not so fat to provoke a large-scale drop in the currency, especially on the pre-holiday week. At this stage, investors are interested in the protocol of the FOMC meeting published tomorrow and the readiness of the Committee (at least in the current composition) to raise the rate next year. Now, given the dynamics of futures on the federal funds rate, the market pawns in the price the probability of tightening in December at 91.5%, while the expectations of the March increase have already exceeded 50%.
Aussie on the edge of the abyss
The Australian dollar falls for the fifth day in a row. Today since morning the currency has fallen in price by 0.15% against the dollar, having updated the June lows in the area of 0.7532. This time, the reason for the sale was the minutes of the Reserve Bank of Australia meeting with a standard set of lamentations over too strong currency, economic uncertainty and sluggish consumption growth. Nothing new – the RBA always complains about these circumstances. However, investors once again realized that there is no need to raise any raise from the Central Bank in the near future – hence the desire to sell the Aussie, especially against those currencies where Central Banks are at least curtailing incentives. The difference in yields on the US and Australian state. bonds is rapidly declining, which means that the Australian loses the status of a highly profitable and relatively reliable currency that has supported him since the beginning of 2016. The prices came close to the line of the upward trend from mid-January 2016, which is now taking place in the area of 0.7500. A break below will not only nullify this trend, but it can also trigger a prolonged fall in the Aussie to at least 0.7070 and further to 0.6700. Of course, this is not a matter of one day, but AUD / USD should be looked at. Today, do not miss the speech of the head of the Reserve Bank, Philip Lowe. New cautious comments from the chairman’s mouth will be a good excuse for selling.
Pound hopes for Teresa’s generosity and breakthrough in negotiations
Pound meanwhile fixed above 1.3200 level and confidently moves to the next resistance in the 1.3280 / 1.3300 area. On the one hand, political problems in Germany can weaken Europe’s negotiating position on key issues of Brexit, on the other – Teresa May does not give up even when she faces a vote of no confidence and resignation. The British prime minister did not just think of what to offer to Europe to lead the negotiation process out of the impasse, but also made sure that its idea was supported by the majority of ministers. On Monday, members of the special subcommittee agreed on a strategy that implied the payment of “compensation” of 40 billion pounds sterling, and arranged both pro-European and anti-European factions. This news was supported by the pound both paired with the dollar, and paired with the euro. Now the word for Europe.