Investors are trying to find a reason for buying risky assets, clinging to any, as it seems to them, encouraging news.
The resumed negotiations between the US and China on trade issues revived the stock markets, which have been growing for several days in a row, demonstrating the hopes of investors that a thin world is better than a good quarrel. An additional positive is also the increase in expectations that the Fed will finally notice the obvious signs of a slowdown in the growth of the American economy and suspend the process of raising interest rates.
Observing the attempt to restore stock markets, in our opinion, it is hard to hope that the situation will change radically in a positive direction. The ongoing contradictions not only in trade but also in political relations between the United States and China are unlikely to disappear anywhere. The unceasing internal political struggle in the States will definitely force D. Trump to go to external conflicts in an attempt to demonstrate to the Americans what a "strong" president he is, which will lead to new conflicts negatively affecting financial markets, and as a result, objective reasons for the slowdown of the global economy. In this case, the demand for risky assets will continue to fall. It is unlikely that even the suspension of the Fed rate increase will be able to restrain this process.
In the foreign exchange market, the dollar continues to be traded in different directions. On Wednesday, it was adversely affected by the publication of data on consumer inflation in the United States, which turned out to be ambiguous. The total value of the consumer price index fell in November to zero from a 0.3% increase in October. The annual indicator value also dropped to 2.2% from 2.5%. The base value of the indicator increased on an annualized basis to 2.2% from 2.1%, while the monthly increase remained at around 0.2%.
True, the markets took this data as negative for the dollar, which, although it was under pressure, was insignificant. Now all investors' attention will be drawn to the results of the meetings of the Fed and the ECB, which may shed light on the prospects of monetary policies of the world's largest central banks.
In addition to today's meetings of the ECB, the NBS on monetary policies, markets will be drawn to the meeting of EU and UK leaders on Brexit, if a sane agreement is not reached, it can overshadow the ECB's final decision to stop incentives and put pressure on the euro and the British pound.
Forecast of the day:
The EUR / USD currency pair is trading in the range of 1.1310-1.1400 in anticipation of Brexit negotiations. A negative outcome could lead to a fall in prices to 1.1365.
The currency pair GBP / USD is above 1.2600. The failure of Brexit negotiations will put pressure on the sterling, and the pair may fall to 1.2400.
The material has been provided by InstaForex Company - www.instaforex.com
