Fundamental analytics

RESULTS OF THE WEEK

The United States and China have signed the long-awaited interim foreign trade agreement  

  1. The US and China signed an interim foreign trade agreement

  2. The Bank of England may reduce the interest rate by 25 bps.

  3. Stock indices have completed their trading week in the green zone

 

The most significant event of the week was the signing of an interim foreign trade agreement between the U.S. and China, which somewhat reduced tensions between the two countries. But the market reaction to this event was quite restrained. Firstly, the date of the agreement was announced in advance. Secondly, many bidders were dissatisfied with the fact that the United States had not abolished the previously imposed trade duties on Chinese imports.

Foreign exchange market

The foreign exchange market had a fairly quiet week. The interim agreement between the US and China and other geopolitical news had next to no impact on the dynamics of the major currency pairs. The largest market fluctuations were related to the publication of macroeconomic data from the USA. At the beginning of the week the dollar was under moderate pressure on the background of the publication of a weaker inflation report and last week's labor market data. The dollar was able to partially recover its losses in the second half of the week. The US currency was supported by stronger retail sales data.

Among the G7 currencies, the British pound continues to show the highest volatility. Investors are reacting not only to officials' statements about the upcoming UK exit from the EU and trade negotiations, but also to speculations about the upcoming meeting of the Bank of England. Comments from some bank representatives as well as weak inflation report have significantly raised expectations that on January 30 the regulator may cut the interest rate by 25 bps.

Precious metals market

Precious metals spent all week in a fairly narrow horizontal range. Despite the fact that the U.S. and China signed an interim agreement, the risks of renewed trade conflict remain quite high. Experts believe that the parties have concluded a temporary truce and after the presidential elections in the USA the conflict may escalate again. Therefore, investors' interest in protective assets remains high.

Oil market

The oil market saw trading in the red zone almost all week. Investors negatively perceived the information that after signing the interim agreement the United States will not abolish duties on Chinese imports. Trade relations between the two countries will remain tense, which in the future will have a negative impact on the global economy and energy demand.  

Stock Market

World stock indices closed the trading week in the green zone. Trade risks remain high, but in the current situation investors are happy with even a temporary truce in the confrontation between the two largest economies of the world. The signed trade agreement will contribute to some stabilization of the situation in the world economy.