The markets are confident that negotiations on the so-called "phase one" will end on a positive note in spite of the trading rallies between Washington and Beijing in recent days.
It is assumed that the first stage of a large trade agreement called "Phase One" will be concluded at the beginning of the new year. Despite the fact that D. Trump and the Chinese side had intended to conclude a trade deal earlier in November, its actual transfer to the beginning of the new year does not seem to scare investors. This is clearly manifested in the dynamics of defensive assets.
On the other hand, the quotes of gold turned down by the end of last week and strengthened their decline during the Asian trading session on Monday. Yields on American treasuries also rolled up. Therefore, the benchmark yield of 10-year-old traders, noting a local minimum at 1.707%, is being traded at the beginning of the new week in electronic trading at 1.784. More so, consolidating not far from the reached maximum value is pulling up although the Japanese yen remains in a sideways trend. A similar trend is shown by the pair US dollar / Swiss franc.
Regarding the dynamics of the currency exchange market, it is worth noting that the US dollar is strengthening its position against a basket of major currencies, as well as the currencies of developing countries. The main reason for this is the publication last week of positive economic statistics from America, as well as the publication of the minutes of the October meeting of the Fed, which signals both the regulator and the markets that we should not expect at least until the middle of next year some kind of decision to reduce the rate levels. This supports the dollar, because, unlike the Federal Reserve, investors expect continued dominance of soft monetary policies among the world's largest central banks. The dynamics of the ICE dollar index clearly indicates the reversal dynamics of the index, which increased on Friday after the publication of strong data on the US manufacturing and services PMI, as well as a marked increase in the consumer expectations indicator from the University of Michigan.
According to the data presented, business activity indices in the manufacturing and US services sectors rose to 52.2 points from 51.3 points, respectively, while the rate from the University of Michigan added to 87.3 points from 84.2 points.
Assessing the current moderately positive background from the negotiations of US-China trade and strong US economic statistics, we believe that the dollar has high chances to continue to grow in the currency exchange markets this week.
Forecast of the day:
EUR/USD remains under pressure amid strong data on the US economy, which significantly reduces the possibility of continuing to lower rates by the Federal Reserve in the near foreseeable future, unlike the ECB. Thus, we consider it possible to continue selling the pair after its decline below the level of 1.1015 with a likely target of 1.0975.
Gold on the spot implements the pattern of the continuation of the trend of the "rising flag". We believe that gold will continue to decline by 1445.30 after breaking the level of 1556.00.
