High uncertainty about the prospects of the global economy has a restraining effect on financial markets
Signs of a recession in the United States
Strengthening of the pound sterling
Descending gold correction
During the week the markets movement had a sideways trend. Fears of a trade conflict escalation between the U.S. and China declined somewhat after restrained statements by the White House. Nevertheless, the risks associated with the slowdown in global economic growth remain high, so investors acted quite passively in the market.
During the week there was not a lot of important economic news, so the currency market was quiet. The main instruments were traded in a narrow range, keeping the horizontal vector of movement.
The dollar index was trading remained mostly unchanged. The dollar was supported by the published minutes of the FOMC meeting and comments of the Federal Reserve Board representatives, who are skeptical about the possibility of further reduction of interest rates. A serious deterrent effect on the U.S. currency was caused by weak data on the PMI of the manufacturing sector (the figure fell below 50 for the first time since 2009) and the inversion of the yield curve of government bonds (a signal of the approaching recession of the economy).
The EUR/USD pair spent the trading week in a very narrow range. Political uncertainty in Italy, risks associated with Brexit and prospects for monetary policy easing from the EU limited demand for the European currency.
The British pound sterling traded above market expectations. The GBP/USD pair on Thursday reacted with strong growth to Angela Merkel's comments. German Chancellor announced that Great Britain still has time to provide a reasonable plan for Brexit before the end of October. Earlier Merkel spoke of a 30-day deadline. Investors took these statements as a signal of a possible softening of the EU leaders' position on London.
Precious metals market
Gold finished the week with a slight decline. Statements of the White House about prolongation of Huawei license and readiness to continue trade negotiations with China have somewhat lowered pessimistic moods of investors concerning prospects of the situation in the international trade development. But the general uncertainty on the financial market remains high enough, which limits the possibility of a more large-scale reduction in the gold costd.
The oil market had quite a quiet trading week. Investors reacted moderately to the softening of the White House rhetoric about China and the publication of ambiguous industry statistics from the United States. Brent and WTI finished the trading week with minimal deviations from the opening price.
The main stock indices showed moderate growth amid the decrease in tension between the U.S. and China. High risks associated with the prospects of the global economy development and the signals of the Federal Reserve Board to take a more cautious approach to the issue of monetary policy easing remain a constraining factor for investors.