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Strong Philadelphia Fed data failed to change the negative market sentiment

On Wednesday, sentiment in equities remained positive around the globe. Investors and traders focused on the start of US corporate reporting season, and above all upon reports of chips from banking industry in the USA. In general, positive reports on leading US financial institutions (yesterday Bank of America and Goldman Sachs reported better than expected earnings) allowed US SP 500 index to consolidate above 2600 points and recovered some of the December losses. For technical assessment of the situation, this is a very positive moment, but today the market sentiment has changed somewhat and looks like that market would have a chance to test this level as a support. Yesterday, there were reports of criminal proceedings against Chinese Huawei, and today the development of this issue alarmed markets putting pressure on equities around the world. New US-China tension over the Chinese technology giant Huawei have heightened concerns on the ongoing trade dispute between the US and China. On this background, global markets are trading in the red, futures for US indices under pressure as well, indicating a negative start for Wall-Street session.

Regarding another important issue that influenced the markets during the week - voting in the British Parliament on Brexit, the situation here also returned to normal stage. Following the last vote, May received a vote of confidence and should prepare the new plan by next Monday to resolve the situation of EU withdrawal. France and Germany are also ready to extend the negotiations from March 29 to the end of June. Summing up, we can say that the worst scenario for the European currency and the pound did not materialize. Since the likelihood of a hard Brexit and the associated risks have significantly reduced on Wednesday.

In the FOREX currency market, US dollar rally that continued throughout the week slowed down today on technical factors. Major currency markets are somewhat oversold, as US dollar is overbought. On Wednesday, the US dollar index came close to a very strong technical level in the area 95.75 points, and further rally higher seems to be problematic. However, the complications of China-US relations bear risks for their trade agreement and somewhat are positive driver in favor of the US currency. The European currency continued to decline and fell to a two-week low - 1.1370-1.1390 zone. This is a strong technical area and given local EUR/USD dollar oversold conditions we can expect a local correction from this level up to at least a zone of 1.1435. The weakness of the European currency intensified after the release of weak German economic growth data.

Today, there is no much information in the market focus today as economic calendar is relatively empty. Most markets focus on the Philadelphia Fed data index. It is considered to be a good gauge of business sentiment in the United States. After the data released the index amounted 17 points, while the expectations were at the level of 10 points. It is not clear whether this data will be able to change the current mood in the market. However, futures showed a slight pullback. Let us see how events will develop as the American equities sessions is just about to begin. 

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