Geopolitics is in the markets spotlight

12 April, 2018

On Wednesday, US equity markets continued the trading week with a moderate decline. The index of the broad market SP 500 rested in the resistance zone of 2660-2680 points and could not overcome it. It should be noted that this zone constrained the growth of the index for the past three weeks of increased volatility in the US market.

Well, the global markets remained under pressure on the background of geopolitical risks and the expectations of missile strikes on Syria. It is characteristic that in the first half of the week the markets preferred to ignore the situation, although the notorious chemical attack in Syria became known on Monday. By the end of the day, the sentiment in the markets was gradually improving, it became clear that the final decision about the attacks had not yet been made, and Americans had some difficulties with involving allies in the new company. From a military point of view, the situation is not good as well, the key to the success of such companies is the suddenness, which you can no longer talk about. Perhaps the Americans will take any distracting maneuver, however, this does not remove the current geopolitical risks and the possibility of a strike is quite high.

Another negative factor of the last days, the trade confrontation between China and the US, has somewhat receded into the background. By the positive moment, we can refer to the proximity of the corporate reporting season in the US, which is able to revive demand in certain sectors, and good economic performance in recent days. Tomorrow, data on corporate profits will be provided by such financial giants as Citigroup, JPMorgan, Wells-Fargo. No doubt that these sharks of the financial business will provide strong data that will support US indices.

For the current week the oil market recovered all its losses. Brent returned to the area of ​​72 dollars per barrel. This is the maximum level from the end of 2014, an impressive gain in the last two months. Yesterday intraday high for Brent was at $73 per barrel. The nearest support zone is in the area of ​​$71 - $71.20. In the event of an escalation of Syrian story, oil will continue to grow on geopolitical risks, the price level in the region of $75 is quite possible.

On Thursday, the gold market again returned to the trading monitors of traders. There was no such volatility on gold for a long time. The market tested strategic support around $1,360, and then immediately retreated to lower levels after the publication of the FOMC protocols. Officials agreed that the US economy is developing at a rather rapid pace, and in the long term may still grow.

It is expected that the target inflation rate of 2% will be achieved in the medium term. These statements, as well as data on the level of consumer inflation (0.2%) caused some strengthening of the US currency. And after reaching the mark of 89 points, today the US dollar index moved to growth. In the middle of European trading, DX is trading around 89.48 points.

Today, in the FOREX currency market, the strengthening of USD dollar continues. The American currency wins the losses. EUR / USD pair retreated to the level of $1.2340, which now acts as the main support. Today in the US there is no any important statistical information so traders will continue to be guided by news related to geopolitics and technical factors.

But in Europe there was another bunch of weak portion of statistics, this time for industrial production, which for the month decreased by 0.8%, as the modest growth was expected at 0.1%. Fundamentally the picture gradually changes to the negative side for the EUR / USD pair. Today only the minutes of the ECB meeting can change the pair sentiment.


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