Geopolitical news determined the dynamics of the market movement last week
U.S. and Chinese trade negotiations
Hopes for "soft" Brexit
Last week the dynamics of the market movement was mainly determined by the geopolitical news. Investors focused on trade negotiations between the US and China, as well as meetings at various levels of UK and EU representatives. In the second half of the trading week these events changed the balance of power in the market.
The most interesting events took place in the second half of the week, when there was a clear trend towards weakening of the U.S. currency across the entire market spectrum. Pressure on the dollar was put by the minutes of the September FOMC meeting and news about the progress in trade negotiations between the U.S. and China. FOMC minutes showed that FOMC officials were increasingly concerned about the impact of external factors on the U.S. economy. Investors perceived it as a signal of further easing of monetary policy. Positive news about the course of trade negotiations in Washington greatly reduced the demand for the dollar as a protective asset against trade risks.
Against the background of a decrease in pressure from the American currency, the EUR/USD pair managed to end the trading week around three-week highs. The European currency was also supported by positive news about the course of negotiations on Brexit.
The British pound sterling became the undisputed growth leader among the major currencies this week. At the end of trading on Thursday alone, the pair GBP/USD was able to demonstrate growth of more than 1.8%. The main driver was the news about the possible way out of the new Brexit agreement negotiations deadend. Great Britain and the EU are cautiously declaring the possibility of an agreement being reached before October 31.
Precious metals market
Gold has finished the trading week with a slight decline. Pressure on precious metals was put by the positive news about trade negotiations in Washington and some progress in the new Brexit agreement draft. Demand for risky assets grew sharply, which always has a negative impact on the yellow metal. This pressure was partially compensated by the weakening of the dollar.
The oil market closed the trading week in the green zone. The main driver of growth was the news about the progress in trade negotiations between the U.S. and China. Investors hope that this will have a positive impact on the global economy and increase demand for energy. Reduced forecasts from the U.S. Department of Energy and the IEA on oil demand in 2020 had a restraining effect on the market.
The main stock indices demonstrated rather differently directed trading sessions. In the first half of the week, the market was declining due to the negative reports in anticipation of the new round of trade negotiations start. In the second half of the week, the indices started to return the previously lost positions because of positive White House comments on the course of the USA/China negotiations.