Monday’s trading day turned out to be quite at lest for the first part of it. Earlier in the European session we witnessed the global markets traded in unusual market quite way. Indeed, the trading session is somewhat going on with restraint mode, as FOREX market is within Friday's ranges, despite the high volatility in European trading. The last week ended with a powerful strengthening of the US dollar, after Friday's labor market data there is very little doubt that the American regulator will continue the policy of raising rates, and this will very quickly return USD dollar back to the levels of annual (recent) highs. There is, however, a reason for today's consolidation. This reason is of political American character. The fact is that tomorrow in the United States there will be a primary election to the US Congress, and the midterm fate of the US dollar depends on which of the two political parties wins. Of course, elections always involve a certain amount of uncertainty, and the markets fix some positions ahead of this strategic event. In addition to the designated elections, Fed will have a trading session this week.
The intrigue about the election remains. Opinion polls demonstrate a strong opportunity for the Republican party to retain control of the congress. How events will develop, we will know tomorrow.
US markets opened slightly mixed. Despite the fact that during trading session, futures for the US indices traded under pressure, SP 500 and DOW opened positively. Earlier, European markets traded in different directions as well. In FX market the dollar continued to rise in European trading, as dollar index marked the highs of the day in the region of 96.50 points. However, the approach of the US trading session brought some profit-fixation in the dollar market, which made it possible for the rest of the market to recover some previous losses.
At a meeting of the Federal Reserve on Wednesday and Thursday, investors may hear of even tighter US monetary policy, especially after a number of strong economic data, including a report on jobs on Friday.
On FOREX, after the local weakening of the dollar, the European currency returned above the support of $ 1.1370- $ 1.1375, we mentioned earlier that this is the nearest tactical support, and at the same time the equilibrium balanced level of the wide zone 1.1300-1.1440. The British currency is consolidating during the trading day near a strong resistance zone - the level of 1.3200. We wrote earlier that this is a powerful area of resistance and it is unlikely to go through this mark on the move.
Gold is still trading volatility. At European trading session, gold adjusted to the area of $ 1226, where buyers went to the counter and were able to return quotes back to the area of 1232. The strategic resistance level is at the same level, which is a mark of 1233.
And lastly, the only important statistics of today, is the data of the index of business activity in the non-manufacturing sector of the United States (ISM services) turned out to be stronger than expected. This is one more statistical information confirming the straight if US economy. The data amounted 60 points when the market expected 58.8.
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