Weekly reviews

FED comments disappointed USD bulls. Gold and the euro continue to look strong

On Wednesday, European markets showed gains. Investors used the strengthened oil as a reason to buy European assets. In addition, the financial sector in Europe also set a positive mood. US markets were neutral, still displaying a slight positive when closed. The Federal Reserve has kept interest rates unchanged and offered a positive outlook on the US economy. The Fed head shared optimistic view on the US economy, though, the main issue was not paid enough attention to, at the same time. Against this background, the sale of the US dollar strengthened. The labor market data from ADP was positive. Numbers of those employed in non-farm payrolls from ADP grew by 246,000 new jobs in January, well above expectations. Analysts in the poll forecasted the creation of 165,000 jobs. Fed maintains its stance on inflation expectations – FED awaits inflation to rise to the target 2% over the medium term.

Today, Europe is trying to develop the success - indices are trading in the green zone. The main order of the day is ECB chairman Mario Draghi’s and the head of the Bank of England Carney’s talks. Investors have already dubbed today as "Super Thursday," in anticipation of three releases from the UK: the quarterly report on inflation, the Bank of England interest rate decisions and the summary of the bank executives’ meeting. The Bank of England is likely to continue its positive forecasts for the near future in today's report, as well as to keep interest rates unchanged. At the same time, investors want to hear the banker's opinion on how Brexit will affect the economy in the short term. The European market has quite calmly reacted to the expected decision by the Fed to keep interest rates unchanged. Most analysts agree that the Fed's decision about raising interest rates, may be adopted in June. At the same time, Europe is afraid of the return of the Greek crisis. There are concerns that Athens might not be able to make debt payments in July, which could be the beginning of another round of debt crisis between lenders and the government. Futures for US indices are in the red zone.

The oil market is trying to get out of a long sideway trading. Brent crude oil futures came close to $ 57 dollars - the upper limit of the medium-term channel. The main driver of growth was the weakness of the US currency, as well as news about the January decline in oil production in Russia for 117K Barrels. The weak data on the US crude inventories was ignored. The level of  57.30 should bring more sales for oil . Therefore, we do not expect strong gains at least until the end of the week amid the rise of tomorrow’s volatility due to Friday's non-farm.

Yesterday, the global market sentiment has slightly improved. As we expected, investors were able to forget about politics and focus on the economy. The mood was supported by strong data from ADP and the positive assessment of the US economy from the Federal Reserve. In general, the Fed has made it clear that the rate-hikes will be gradual and adaptive. The weakness of the American currency continued. There is strong demand for gold, European currency and oil. On other hand - Japanese yen is under strong pressure.

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