News on US and Chinese trade negotiations became the main driver of markets last week
1. Trade negotiations between the USA and China
2. Bank of England meeting
3. The decline in gold
There were few important events in the economic calendar this week, so the news in the field of international trade became the main driver of the market movement. Traders react quite strongly to any reports on the progress of trade negotiations between the United States and China. But there is no information on the place and date of the possible signing of the interim foreign trade agreement.
The trend of a stronger dollar prevailed in the foreign exchange market. The dollar index updated highs in more than three weeks of trading. This market reaction was associated with the publication a week earlier of good data on the labor market and the Fed signals a pause in the cycle of lowering interest rates.
European currency could not cope with the pressure of the dollar. Amid the meager economic calendar, the euro was deprived of support factors. While the market is dominated by pessimistic expectations regarding the prospects for the development of the EU economy. The position of the new ECB leadership in the relationship of further plans for the implementation of monetary policy remains unknown.
In the GBP / USD pair, a downward trend also prevailed. Pressure on the British currency was exerted by high political uncertainty in the UK. The decline in the pound accelerated after the publication of the results of the meeting of the Bank of England. The regulator kept the rate unchanged, but 2 out of 9 participants in the meeting voted to reduce the interest rate. The reaction of the market was quite strong since for the first time since 2016, a member of the bank has voted in favor of lowering the interest rate.
USD / JPY showed the sharp trading this week. Investors reacted nervously to conflicting reports on US and Chinese trade negotiations.
Precious metals market.
Gold closed the trading week with a decrease of more than 2.5%. The pressure on the price was provided by the American dollar and news about the progress in trade negotiations between the US and China. On Thursday, the Ministry of Commerce of the PRC announced that it had reached agreements to abolish previously introduced trade duties after signing an interim agreement. Gold, as a defensive asset, has lost its investment attractiveness. Later, representatives of the White House denied this information, but the precious metal was not able to win back the previously lost positions.
The oil market completed trading near the opening levels of the trading week. From Monday to Wednesday, positive sentiment prevailed in the market amid reports of progress in US-Chinese trade negotiations. The U-turn took place after the publication of data on a significant increase in US oil reserves and information that OPEC + countries do not want to cut production to stabilize oil prices.
The vast majority of major stock indexes completed the trading week in the green zone amid expectations of the completion of the first phase of trade negotiations between the United States and China. This increases investor interest in riskier assets and promotes stock growth.