Weekly reviews

Consolidation continues at low volumes

Yesterday in Europe, low volume correction continued amid profit taking and positions relocation. US markets also displayed a slight decline, as the trading activity was much below average. American statistics proved to be mixed- GDP for the third quarter was higher than expected and amounted to 3.5%, though the market assessment of the new data is not yet clear, but what is clear is that GDP data increases the risk of faster rate hikes next year.

Today, before the long weekend, most markets will close earlier. European investors seem to have decided to go for the weekend on a positive note. Most European indexes traded in the green, amid banking sector positive news and stable oil. It has become known that Deutsche Bank AG and Credit Suisse Group AG agreed to settle the mortgage problems in the US, while in Italy the government has found 20 billion euros to rescue the country's banking sector. However, trading volumes remain very low. US futures are trading neutrally pointing to flat Wall-Street open.

The oil market is in a current week range and traded just below $ 55. The FOREX market virtually froze. FX contracts are on the level that has formed on this week. Yesterday US dollar correction failed to develop as the dollar index hold at 103 points.

Christmas rally in US and European markets gradually turned into profit-taking and consolidation before the long weekend. The main growth drivers were the expectations of stimulating policy by elected US president, strong oil and good statistic data. Contrarily, emerging markets continue to trade in close proximity to historic minimums due to capital outflow,  strong US dollar and higher yields of US government bonds. We expect that this trend to continue in the next year. The US currency gained to 14 year highs, and  we expect the dollar to continue gaining in the next year- strong GDP data reinforces expectations of faster interest rate hikes in line with the Fed's statement. Until the end of next week, the markets will try to stay on the occupied levels, but sluggish correction on profit taking can not be ruled. Trading activity will be low. On Monday, the US and European markets will be closed.