Market reviews | Forex Optimum

Market reviews

Reviews

Investors Didn't Believe US Fed, Dollar Is Under Pressure Again

Yesterday the US Fed wrapped up a two-day meeting. The Fed kept its rate at 1.25% and stated that it would start shrinking asset holdings in its balance sheet 'relatively soon', also saying that it will follow the plan announced in June. In June, the Fed set out a plan to cut Treasury bonds and mortgage-backed securities held in its balance sheet, which has ballooned to $4.5 trillion. The largest part of them was bought in the midst of the financial crisis and recession in 2007-2009. In addition, the regulator said in its statement that the pace of economic growth was moderate and job growth remained strong.

On the whole, the markets received no new data. Moreover, the markets might not have believed such optimism, considering the latest data, particularly data on inflation.

In the light of this, yesterday there was a sale of the US dollar against G10 currencies. The US Dollar Index decreased at some point to 93.29. Meanwhile, the SP500 index hit a historical high at 2479. The pound/dollar currency pair reached a target at 1.31 and keeps climbing. The Aussie also rose considerably against the greenback by reaching above 0.80 yesterday.

In the oil market, a buying frenzy died out. The statistics released yesterday by the US Energy Information Administration, in fact, confirmed the data published on Tuesday by the American Petroleum Institute. According to the EIA, crude oil inventories dropped by over 7 million barrels, whereas gasoline reserves decreased by over 1 million barrels.

In general, the situation is shaping up rather favourably for a continuing increase in oil prices. The US reserves have been declining for a fourth consecutive week. This also indicates the current driving season. This factor will be providing support presumably till the end of summer. In addition, the pace of US drilling activity has slowed down. According to the latest data from Baker Hughes, there is still an increase in drilling, however it is not that active.

From a technical perspective, Brent oil reached our guidemark at $50-51 per barrel. However, it may only be the start. Now opening quotes might be headed to 53-54within an uptrend.

The ruble was backed yesterday by increasing oil prices, however a surprise was also in the latest US Fed meeting minutes after which the US dollar rapidly declined against all major G10 currencies, including the ruble. In terms of the medium-term prospects, yesterday's step by the Fed in regard to its rate can be construed as a benefit for the ruble. The difference in the yields between assets in rubles and the ones in dollars will remain high, it will restrain the outflow of foreign capital even despite potential sanctions. Speaking of an upcoming meeting of the Bank of Russia on Friday, the regulator is expected to keep its rate unchanged, considering an uncertainty in the relations between Russia and the West, and in oil prices.

Technically in the short term for USD/RUB, we are to expect consolidation within a range of 58.70-60.40.


Ivan Kapustyanskiy, equity analyst at Forex Optimum

You may also be interested:

13:58 08.11.2017
Brent Not Ready To Keep On Rising
First, a climb in oil prices on Monday needs to be discussed. Yesterday Brent rose in price by 3%, exceeding the $64 dollars per barrel level. This is the first time these levels were reached since 2015. There were enough news releases that served as a factor for oil prices to increase, but the key news was that there was a purge in Saudi Arabia's elite. Two crown princes were killed under different circumstances while being arrested. Today Brent has been trading near the upper border of an
14:30 24.10.2017
Euro Expecting ECB Meeting In Sideways Trend
The Japanese yen was performing rather predictably on Monday. During the first trading hours the USD/JPY currency pair was testing the 114 level. The current dynamics remain unchanged. The next short-term marker in this currency pair is located at the 114.4 area. A surge was ensured by the report that Prime Minister Shinzo Abe's party secured a strong mandate in Japan's election that took place last weekend. The prime minister strengthened his position and most probably will stay in power until
13:27 13.10.2017
Investor Attention Shifted To ECB Meeting
Today, on Thursday, investor attention shifted to a speech by Mario Draghi, ECB president. Taking into account the recent dynamics of the euro, it can be assumed that investors obviously expect some strengthening in the rhetoric towards tightening of EU monetary policy, and surely investors anticipate more details in regard to cutting the quantitative easing program. Currently all statements made by the ECB president and other ECB members will be deemed in the context of potential changes at the
Deposit
options
Trading
platform
download
Bonuses VIP