On Tuesday the situation in global markets remains tense. Yesterday, US markets experienced another strong decline. Strong sales in the technology sectors sent NASDAQ index down by three percent, while the main market index SP 500 dropped below the mark of 2,700 points. Earlier today, Asia also displayed strong sales, Europe is trading under pressure, futures for US indices are trading in the red. Sentiment in the markets is also implicit negative, although the equities are traded restrained, as trading activity is below average.
Now two strategic factors have emerged in the markets, and both factors are of a long-term negative nature. First, a slowdown in global economic growth is back on the agenda, and this slowdown is accelerating due to the second negative factor — the US trade opposition China-China. In the regard regard of the second factor everything is clear, this is a long-term geopolitical competition between the USA and China and it will only gain momentum. The only question is when the parties will move to a more or less open confrontation, are the elites ready for this, or is there a period of diplomatic games and preparations ahead. However, the prospect of a slowdown in global economic growth could put pressure on the US dollar. Recall that the dollar moved to a correction last week, possibly amid a change in expectations regarding the rate of rate-hike in 2019.
Yesterday, the representative of Fed Williams said that the regulator intends to continue the policy of gradual and stable increase in interest rates, but he refrained from more detailed information of next year FOMC moves. On Friday, another representative of the Fed, Harker, in an interview with the Wall Street Journal even questioned the feasibility of changing the rate at the December meeting, noting a slight excess of inflation over the target.
In the FOREX market, the situation may change today. The dollar index fell to the support area around 96 points, and a corrective pullback from this zone is quite likely. In the US, news activity is expected to be low. The most important data of the day will be made public later when the volume of construction of new houses becomes known, as well as the number of building permits issued.
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