Stock markets out of festive tranquility

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At the end of the trading week, global investors are showing cautious interest to purchase risky assets. Stock indexes Asia grew after the wall street and European futures are rising within 0.5%. The US and China announced a new round of trade negotiations, which will take place at the end of this month. Progress in relations between the two countries, combined with a more “dovish” rhetoric, the fed contributes to the manifestation of optimism among investors. However, bullish potential is still limited due to lingering concerns over the global economy.
This week investors prefer to focus on positive factors, but the threat of slowing global growth have not disappeared. China plans to revise the reduction target level of GDP growth in 2019, citing risks associated with the uncertainty of future trade relations between the US and China. But Japan, it seems, will be forced to lower the expected wage growth as component of GDP, citing the weak data on the labor market.
Today the focus will be the December report on U.S. inflation. The dollar now is in a difficult situation, and given the pressures, we can say it still holds good. The two main bearish driver is shutdown and a softening of rhetoric of the Central Bank. Given that the fed has already begun to actively prepare the ground for a pause in the rate hike, today’s inflation report is unlikely to affect the mindset in the camp Committee. But the dollar is in a vulnerable position, may show more painful drawdown, if after a zero growth in core CPI monthly will be released in negative territory. On the publication of the report can be volatile.
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Nathan Lambert
Head of research,
Global FX