US dollar gains as a corrective pullback - markets came to significant technical levels

Yesterday, global stock markets continued to trade under pressure. However, amid saturated news background, markets were able to win back some of their losses, and recovered from daily lows. British Prime-minister clarification of GB’s Brexit position contributed a lot to this pullback. US markets also declined yesterday. The situation turns more complicated as unexpected Trump’s statements appeared on more difficulties that he will face in implementing its election promises. As a market’s reaction the profit-taking hit sectors, which investors priced in on his presidency. Investors interpreted Trump’s comments as a sign that he could not oppose the series of interest rate hikes and a stronger dollar, as it was originally predicted. Obviously, the markets still have no clarity on the economic plans of the new administration.

Markets in Europe and America

Today, European indices are trading mixed in response to yesterday's statement by the Prime Minister of Great Britain. European investors rather negatively perceived Trump's statement that the US currency had strengthened too much. According to experts, it can lead to currency wars on the global markets, which will have negative impact on the global world trade. US indices futures traded in the green zone.

Economic data published today in Europe, in general, is positive and able to provide some support for markets.

The German consumer prices index rose 0.7% in December from the previous month, in line with expectations of analysts.

The harmonized index of German consumer prices in December rose by 1.0%, compared to the previous month, in line with expectations of analysts.

UK unemployment rate remained at the same level in November and amounted to 4.8%, as expected by economists.

Eurozone consumer price index rose 0.5% from the previous month as economists expected in December.

Oil

Yesterday, oil strengthened during most of the day, amid declining US dollar and verbal interventions made by the Minister of Energy of Saudi Arabia. However, crude oil futures came under heavy selling in the region of our target - the upper boundary of the current range of $ 56.45. Today, the decline continued - price is moving towards the medium-term demand zone, located on the support level of $ 54.50. We believe that the demand to resume somewhere in the area, which will lead to moderate oil gain.

Today, the market focus will be on OPEC monthly report of. Tomorrow we will wait for official US data on oil inventories. Our target range remain intact $ 56.90- $ 54.45.

In result

Yesterday stressed and cautious sentiment strengthened in global markets. Brexit News in our view do not bode well, and this factor will exert increasing pressure on the European markets. Concerns continues  before the main event of the week takes place - inauguration. Yesterday's Trump comments hint at the fact that not everything that was promised, the new US president will be able to perform. Amid this sentiment, US dollar decline has continued, although it is worth noting that the markets have technically came to an important resistance levels. (Gold futures and European currency) Euro upgraded six-week highs, but the approaching ECB meeting, and Fibonacci extension level 38 will stop further gains. Analysts do not expect significant news from the ECB meeting, but the focus is on information as the regulator assesses inflation in the euro area. Corporate reporting season in the US keep on going. In addition, we wait for a large block of US statistic data today.

chart 01.2017

chart 01.2017

chart 01.2017