Weekly reviews

Fed meeting in focus, markets look optimistic

On Tuesday, European equity markets are traded under weak pressure, investors are cautious ahead of Federal Reserve meeting and tomorrow's press conference by Fed’s Chairwoman Janet Yellen. Investors’ expectations of another rate-hike by the end of this year, according to the CME Group, grew to 57%, while a week ago this probability was estimated at 41.3% only. Futures for US indices are traded neutrally. Asian exchanges also showed a strong session and moderately gained.

On FOREX currency markets Eur/Usd continues restrained gaining, the pair finished Monday's trading above the psychological level of 1.19 at the level of 1.1954. The main event that all market participants are waiting for will happen tomorrow, when after two-day meeting of the Open Market Committee (FOMC) a decision on the interest rate will be announced, as well as fresh economic forecasts and an accompanying statement.

It is expected that the rate at this meeting will not be increased, but the news on timing of balance reduction will closely be watched.

The main investors’ attention will be drawn to new economic forecasts, details of the statement and, of course, to the speech of the head of the Federal Reserve. What Yellen will say and the general rhetoric of her comments will influence the further dynamics of US dollar.

Yesterday gold prices again showed negative dynamic. The decline in the price of precious metal was influenced by such factors as: US Treasury bonds yield rise, world stock markets positive dynamic, the decline of geopolitical tensions around the DPRK, US dollar gains ahead of the Fed meeting. For a while the situation develops in favor of sellers and further decline to the key level of $ 1,300 per troy ounce. As we already mentioned before, the area 1301-1292 is very strong technically. The market took tree attempts to move up through that resistance and now the gold is correcting back to this level.   

The Brent oil market is traded at the local highs of the last days- $ 55.70. Today, the market will analyze the data on oil inventories from API. The latest drilling data from the US Department of Energy showed that shale oil production is on the rise and may exceed 6 million barrels per day next month. This is certainly negative news for the oil market however reports that Saudi Arabia reduced oil exports in July from 6.8 to 6.6 million barrels per day was a positive signal. In addition, Hurricane Maria, that is now passing over the Caribbean basin, but may also affect the Gulf of Mexico, is now providing support for the oil market as well.


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