Expectations of a meeting between Donald Trump and Xi Jinping limited the volatility of financial markets last week
Meeting of PRC and US leaders
Gold has updated year maximum
The Fed may lower the rate by 0.25 b.p.
The market has been waiting for the G20 summit and the meeting of Donald Trump and Xi Jinping for most of the week. Therefore, trading for the main instruments was held in a narrow range most of the time, with the preservation of mainly lateral orientation of the movement. A small surge of volatility was observed only on Tuesday, when new comments on the assessment of the current situation and plans for the future were given by some members of the FOMC and the head of the FOMC Jerome Powell.
The foreign exchange market has had a rather boring trading week. Most of the published economic indicators were in line with the market expectations and did not have the desired impact on trading. A serious deterrent for speculative investors was the uncertainty about the further trade relations between the USA and China.
The EUR/USD pair spent most of the week trading close to its opening level. James Bullard's comments on the possible reduction of interest rates by 0.25 b.p., provided some support to the U.S. currency, as previously many experts and investors expected from the regulator to reduce rates much more in the medium term. But by the end of the week the dollar almost lost this advantage, as many investors were getting rid of the U.S. currency, amid uncertainty around the meeting of the leaders of China and the U.S.
The pair GBP/USD finished the trading week with a slight decline, remaining under the pressure of uncertainty associated with the process of the UK exit from the EU. The most probable candidate for the post of the prime minister of the country, Boris Johnson, gave rather contradictory comments to which the market reacted restrainedly. In the near future the situation with Brexit is unlikely to become clear, so the U.S. dollar will remain being the main driver of movement on this instrument.
The USD/JPY pair also showed quite calm trading. The majority of investors took a wait-and-see position before the long-awaited meeting of Trump and Xi. The dollar was also traded in a very narrow range. Therefore, the activity of traders during the week was quite low.
Precious metals market.
Gold was marked by another update of the five-years-ago highs. Over the last month the instrument has already strengthened by more than 10%! But, in the middle of the week, against the background of moderate pressure from the dollar and the influence of technical factors (many investors began to fix long positions on the renewal of multi-year highs), gold lost most of its positions and finished trading near the opening price of the week. How the instrument will behave in the next five days will depend on the results of the meeting of Donald Trump and Xi Jinping.
The oil market had a rather successful trading week. Strong support for quotations was provided by the industry statistics data from the USA, where the strongest decrease in the level of oil reserves since September 2016 was recorded. Thanks to this information, the spread between WTI and Brent has shrunk even further and now amounts to just over $6. But the most interesting events in the market will take place next week, when the results of China and the U.S. leaders meeting will be known and a meeting of OPEC + will be held.
The main stock indices were traded in the red zone for the most part of the week. Investors were very cautious about buying risky assets, as most of the experts did not expect a breakthrough in trade negotiations after the meeting between Donald Trump and Xi Jinping.