Weekly reviews

ECB meeting in markets' focus

Yesterday, on Wednesday, European stock markets gained moderately, with the exception of the French CAC40 index amid some stabilization in the metal markets. On the contrary, the US market continued restrained dynamics and closed mixed. Federal Reserve Chairman’s statements have been met positively in the context of optimistic perception of the situation in the economy. During her speech, Federal Reserve Chairman, Janet Yellen said that she expects steady interest rate hikes before the end of 2019, as US economy shows stable growth, the employment rate is close to the maximum levels, while inflation is moving toward the goal. At the same time, she expressed confidence that the improved economic performance will continue.

Today, European markets are trading in the red - investors took a pause before the ECB meeting and executive’s speech. The key event today will be held in Frankfurt, where the decision will be made on interest rates, and the current program results will be discussed. Market expectations does not imply any change in the policy of the European regulator. However, the regulator’s perception of the current inflation is a subject of interest. Inflation in the euro area has increased dramatically, while Germany urges the ECB to end the bond purchase program.

ECB President, Mario Draghi, takes a position to continue the quantitative easing program and keep rates at a record low. According to Draghi, the inflation rising is caused by the jump in energy prices.

The oil market yesterday came under pressure in relation to the news on statement of IEA head about US shale oil production growth. The production of shale oil is a major risk factor for the oil market this year. Today, the main report from the IEA to be published, and it can be a kind of negative, as well as official data on US oil inventories. However, OPEC representatives will meet this weekend , which is likely to return a positive sentiment to the market. We maintain our forecast for oil to trade in the range of $ 54.00- $ 54.45.

Conservative sentiment persists in the market as all global markets remain mostly in flat in anticipation of the major events of the current week. Besides the ECB meeting, we will focus on next Yellen’s speech and finally, the US president's speech after the inauguration on Friday.

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chart 01.2017

chart 01.2017