Fundamental analytics

Markets focus shifts to US data, USD dollar continues to grow

Wednesday trading session was influenced by a negative sentiment and risk-off mode after news on the introduction of additional duties worth 200 billion of Chinese goods. Let's put it clear this is the beginning of the economic confrontation. In addition, most likely it has a long-term nature. Markets also understand this and produce the appropriate assets relocation. In particular, commodity markets are under strong pressure,(yesterday oil lost 7% for a day) and the US dollar is in high demand amid the highly stable yield of US government securities. Of course, today Asian markets adjusted somewhat on the background of cyclical nature of markets, futures for American indices and European exchanges are also growing, which means that the markets have some else in the focus. However, this does not change the fundamental picture. The world is rapidly moving in the era of economic rivalry, currency wars and trade confrontations and for markets this will lead to an increase in volatility.

In the next two trading days, data on consumer inflation in the US and the release of US banks earning reports may distract attention from the topic of trade contradictions.

Data on industrial production in the EU somewhat revived the market, as the actual figures slightly differ from the forecast, the growth was 1.3% with expectations for growth of 1.2%. Besides, the last month level was revised slightly for the better, from -0.9% to -0.8%.

But the main events are expected to appear later, the report on last ECB meeting, as well as the inflation report will be presented in the USA. Markets expect annual growth from 2.2% to 2.3% serving as one of the main landmarks for the Fed and investors in assessing the prospects for implementing the planned rate hikes.  It is these data that will determine the further course of trading today. The US dollar continues to feel confident. US dollar index is heading towards the upper level of the range 94.96.

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