The US stock market updates historical highs
The coming days promise to be very rich important news with the potential to set the tone for trading over the next few weeks or even months. Earlier in the week, U.S. officials will travel to China to conduct a new round of trade negotiations. Observers do not hope for a breakthrough, but we should not ignore the news from this front, because with weak expectations, the markets the easiest to surprise.
Mid-week focus will shift to the fed’s decision on rates. There is little doubt the reduction of 25 basis points, and pay attention to the signals for further action. Willingness to continue the policy easing already at the next meeting could become a powerful stimulus for the rally in equity and commodity markets.
At the end of the week we are waiting for the most influential economic release statistics on the labor market in the United States. The news often provoke a jump in volatility. Analysts on average expect an increase of 160 thousand, against 224 thousand in the previous month and at an average growth rate of about 200 thousand per month.
In addition, the reporting season is in full swing, and so far, the company reported slightly better than expected.
In all these cases, market expectations look quite cautious. This creates the possibility for positive surprises that they are able to return to the markets positive sentiment.
The stock market
The Nasdaq indexes and S&P500 closed last week, updating the historical highs. Reporting IT companies overall exceeded market expectations, which contributed to the growth of the United States. However, in China there has been decline in profits of manufacturing companies. Also pay attention to lag the Dow Jones industrial. Manufacturing industry is often considered as a leading indicator.
The single currency failed to develop rebound, and Friday to the end of the day returned to the 1.1120 area. The EURUSD moved sharply up on Thursday during the press conference Draghi, as part of the players were counting on an immediate easing. However, in our view, the comments of the ECB President did not contain anything that could hold long-term buyers. Rather, it was a short-term impulsive reaction. The key battle of bulls and bears for the level of 1.1100 transferred for the current week and may prove to be a turning point for the trend in EURUSD in the coming months.
The pound again is laid a negative scenario of exit from the EU without a deal, as new Prime Minister Johnson is going to do it strictly on 31 October, regardless of the progress of the negotiations with the European Union. At this news the GBPUSD slipped below 1.24 to the end of the week, updated 28-month lows. From the technical analysis, however, we continue to signal exhaustion of downside momentum, which increases the chances of rebound and subsequent reversal of the trend.
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