Varchev Finance: Trading day in one post 23.02.2018

Trading day in one post



Asian stock market: Asian indexes are trading with gains. The Japanese Nikkei reported a 0.42% increase. The Australian ASX added 0.69% to its value. Major mining companies Rio Tinto and BHP Billiton rose 0.7% and 1.28%. The Chinese markets were also green. Hang Seng is 0.84% ​​up, Shanghai composite and Shenzhen composite are 0.09% and 0.21% up.


FX market: USD holds its upward momentum. In the last week, the US currency managed to return some of its losses to its main competitors. EUR/USD is traded in broad medium-term consolidation as the price is around the bottom of the channel. A break below 1.2200 will most likely increase the momentum of the dollar. On the other hand, if the price breaks the resistance above 1.2550, we will probably see a further drop in the US currency. Today we are looking forward to the Fed's Monetary Policy Report. We will see the central bank's projections for the interest rate hikes. During the news, high USD volatility is possible. JPY seemed to lost its upward momentum. The decline in the volatility of the stock market and the end of the bearish impulse of the indices have a negative impact on hedging instruments such as JPY. The monetary policy of the central bank still remains extremely negative to the currency. We do not expect either an increase in interest or a reduction/termination of QE by BoJ. Fundamental analysis indicates that the JPY should be lowered. We should not forget that if uncertainty and sharp market movements reappear on the market, investors will be rushing to JPY again. The decline in AUD and NZD continues. Inflation in the two countries is around the target of banks, but interest rates are comparable to those of more developed countries (US 1.5%, Canada 1.25%). Investors would not want to invest in these risky assets to get almost the same return as if they were investing in the US or Canada for example. For the time being, we remain negative to AUD and NZD.


Commodities market: The GOLD decline continues. Precious metal suffers losses because of the rising dollar. The rise in US inflation also contributes to the fall of the metal prices. Gold has a long-term upward trend and its current price is about $1325. In the short term, we see a signal for long position of the metal, but in this case we need to pay more attention to the sentiment, and he is against GOLD. It is dangerous to enter a short position because there is nowhere to place an adequate SL. It is most logical to wait for the price to reach levels of support or resistance and then position ourselves on the market. OIL: Oil futures indicate that black gold has fallen over Asian hours. Brent is down 6 cents and is priced at $66.33 a barrel, while WTI is down 4 cents and is priced at $62.73 a barrel. The question everyone is asking is whether OPEC will extend its oil constraints agreement, provided the US continually increases its operating oil platforms and offset part of the shortage created by OPEC.


European stock market: European indices will start the session with gains. The German DAX will open with around 50 points higher at 12485 euro, a French CAC with a 20 point increase around 5315 euro and a UKX with a 20 point increase around price 7240 pounds. It seems the bearish momentum of stock indices lost power and investors are again willing to invest in risky assets. We remain positive about the European indices.


US Stock Exchange Market: The stock market situation in the US is not different from that in Europe. Risk on sentiment returns to the market, and the long positions of indexes are beginning to accumulate. Futures of US stock indices show that they saw an increase during the Asian session. DJIA is up almost 100 points, S&P 9 points and Nasdaq 20 points. We remain positive towards the US indices.

Economic calendar for the European and American trade sessions 23.02.2018

9:00 Germany - Gross domestic product
12:00 EU - CPI
14:00 UK - BoE Ramsden speech
15:30 Canada - CPI
18:00 USA - FED monetary policy report
20:00 USA - Baker Hughes oil rig count

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