Fundamental analytics

We expect the market activity to return in the American session, in the focus - Jerome Powell’s comments

After the positive start of the trading week, on Tuesday US equity markets showed mixed dynamics - DOW displayed a symbolic minus, while SP and NASDAQ were able to stay in the green. The restrained equity market trend persists in Wednesday as global markets are traded within yesterday's narrow ranges showing low trading activity. European stock markets opened negatively.

Last week, US equity markets approached record high levels near the four-month maximums, although markets remain under some pressure amid US plans for additional tariffs on Chinese goods worth $50 billion.

It is expected that today US Federal Reserve will announce a rate hike of 25 basis points for the second time this year. This week European Central Bank will also meet as well as the Bank of Japan. The focus will be on how many times the Fed will raise rates this year, and how much this exceed the levels that the markets consider neutral for the economy.

The economic forecast of the FOMC and subsequent comments will be of great importance for the market and for USD dollar as well. Given the current growth of US economy, the labor market straight and the level of inflationary pressures, many investors expect changes for rate policy for the current year. This is the most interesting intrigue for USD dollar and for the whole market as well. US economy conditions may suggest gradual shifts toward more hawkish monetary policy but US administration is interested in weaker USD dollar. So Powell’s speaking and formulations will be in the spotlight.

Euro weakened to five-day lows around $1.1720 - the support level of 23.6% Fibo. However, the volatility in the FX market is minimal these days and this decline is insignificant and can not be regarded as a technical pattern or market intention.

There are no important statistical data in Europe today, and the results of the ECB meeting will be announced tomorrow. Despite the influence of FOMC we believe that the full return of market volatility for the EUR / USD market can only be expected tomorrow as ECB meeting might bring much more surprise for the market.


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