Fundamental analytics

Massive decline in global equity markets and more USD dollar decline

The expected changes in the foreign exchange market were seen on the chart back on Friday and Monday, but they began to materialize on Tuesday. However, as it seems today, these changes are much larger then we previously considered. This week we might witness the beginning of middle-term downward equity trend. In addition to the overheated dollar, the correction of which was obvious and upcoming, US equity markets opened the day deeply in the red. Therefore, on Friday, US stock markets opened with 1% decline.

Earlier today, Asian equity indexes also recorded a seven-day decline. European indices traded under heavy pressure. Commodity markets are trading under pressure. Metals are declining, silver loses 0.80%, platinum 1.70%, and copper loses half a percent. Gold is trading in a very volatile trading session; quotes are trying to gain a foothold around $ 1987 levels, aiming to overcome the resistance around $ 1,190.

On FOREX, the euro fell to $ 1.1430 on Tuesday and reached back $ 1.1515 in Asia. Support was observed in the zone of last week's lows 1.1480. Today on the background of a weaker dollar, we expected the pair to return above $ 1.1515 and in early US trading, the pair crossed this remarkable mark.

British currency is in the spotlight of entire market for this week. It is the leader of the growth. Two questions continue to determine the dynamics of the GBP / USD: Brexit and economic data. As for Brexit, there is some movement in the information space, and there are talks that a deal can be made on weekends. United Kingdom data were mixed. The trade deficit was larger than expected, while industrial output grew slightly more than predicted, production fell by 0.2% (instead of increasing by 0.1%). Construction spending was soft, and monthly GDP was flat in August after rising 0.4% in July (initially 0.3%). On the background of positive Brexit expectation and USD dollar decline, the British currency continues to grow today. Earlier GBP quotes have reached a nine-day high around 1.3218. The strong resistance area is located already close – this is area 1.3120-1.3125.

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