Wednesday trading session was full of strategical and interesting data and ended with impressive rally of global equities. US SP 500 gained 1.55% and reached the area above 2780 points. As it was widely expected US general regulator left the main rate unchanged 2,25-2,5%, but FOMC head Jerome Powell’s comments were in the overall spotlight. FOMC pledged to be patient with further interest rate hikes, sending the clearest signal yet that its three-year drive to tighten monetary policy is close to an end not starting. What does it mean for markets? Not less than a signal to sell USD dollar for the middle term perspective.
However today market sentiment has change somewhat as old-new risks for global economy slowdown have arisen once again. These come from two factors. China data on PMI in manufacturing area proved to be weak (slight gain which looks like statistical error fact 49.5, expectation 49.4)and first signs that Eurozone economy is close to recession. Italian GDP data for the fourth quarter of 2018 showed a negative value for the first time in the last six years. On this background, futures for US indices are trading mixed, while European indices have fallen into the red. Yesterday's forming rally is under threat and hardly to proceed.
Elsewhere, US-China trading talks are gaining momentum. So far we have not received any official information on the matter but given that this is the second day in progress, we can expect news later US session today. President Trump will meet with Chinese Vice Premier Liu and no doubt Trump will tweets afterwards that can influence the market. Investors will stick to US corporate reports and Amazon corporation data will be in spotlight.
In the FOREX market Wednesday session was somewhat remarkable. Forex traders received confirmation that USD dollar is now officially weak. USD dollar index dropped to four months low 94.85 but today Dollar index is preparing a kind of tactical pullback from this strong support area. However we believe that the middle-term target for USD dollar index is area around 94.30-94.15 points. This mark coincides with EUR/USD area 1.1585. Shortly ahead of Wall-Street start, EUR/USD is making reconnaissance in the resistance area $1.1515 and slightly declines down to 1.1470- first tactical support. British pound is locked within tight range 1.1510-1.1475 experiencing the two controversial factors. First it is Brexit uncertanity that pulls the market lower, and second it is the evident USD dollar weakness.
In the commodity markets, Brent oil price keeps on restrained growth within tight range $59.75-$62.80. As always, there are two main factors of influence for the market – new data on lower US oil import and US embargo on Venezuela oil export. Today we have a large block of statistical data in US. Markets will analyze information on new home sales and Chicago PMI.
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