Market strains has eased (Weekly Review)

2018-08-20
Last trading week was quite calm. The hype around the conflict situation between USA and Turkey chill down and the Turkish Lira managed to win up some part of its losses. Against this background investors have made reassessments in the direction of risk lowering caused by the American-Turkish conflict and by the Lira’s decline to the Eurozone’s bank system, thanks to which EUR in pair with USD could use the support in 1.1300 and recover its positions up to the resistance in 1.1443.

However, interest rate differential, trade wars between USA and EU, intractable American-Turkish conflict as well as the threat of the US sanctions against companies and banks involved in construction of North Stream 2 (common main gas-line project of Russia and Germany) keep EUR vulnerable. Therefore, we shouldn’t expect more massive recovery in the absence of positive news for it, but at the same time there is no cause for its collapse at this stage.

Stock indexes demonstrate heady growth again, which has been enhanced by news about the forthcoming trade woes negotiations between delegations of the United States of America and China. In general, negotiations are regarded as the preparatory phase before the meeting of these countries’ leaders, which could take place in November of this year. Therefore we shouldn’t expect any progress, and indexes may at any time face sell outs, which will support JPY, although interest rate differential remains negative factor for it.

Schedule for this week:

Monday, 20th of August
09:00 GMT – Germany. Construction output;
13:15 GMT – Canada. Speech by Mrs. Carolyn Wilkins (Bank of Canada);
15:00 GMT – USA. Speech by the representative of the US Federal Reserve System Mr. Bostic

Tuesday, 21st of August
22:00 GMT – Australia. Speech by the head of the Reserve Bank of Australia Mr. Philip Lowe;
01:30 GMT – Australia. Minutes of meeting of the Reserve Bank of Australia;

08:30 GMT – Great Britain. Government sector net borrowings (July);
12:55 GMT – USA. Redbook retail sales index

Wednesday, 22nd of August
22:45 GMT – New Zealand. Retail sales;
03:10 GMT – Australia. Speech by the deputy head of the Reserve Bank of Australia Mr. Debelle;
12:30 GMT – Canada. Retail sales;
18:00 GMT – USA. Minutes of meeting of the Federal Open Market Committee of the US Federal Reserve System

Thursday, 23rd of August
23:50 GMT – Japan. Foreign investments in the Japanese stocks;
23:50 GMT – Japan. Investments in foreign bonds;
07:30 GMT – Germany. Speech by the head of the Bundesbank Mr. Weidmann;
07:30 GMT – Germany. Markit composite purchasing managers’ index;
07:30 GMT – Germany. Markit purchasing managers’ index in the service sector;
08:00 GMT – Eurozone. Markit purchasing managers’ index in the service sector;
08:00 GMT – Eurozone. Markit purchasing managers’ index in the manufacturing sector;
11:30 GMT – Eurozone. Data on the European Central Bank’s meeting regarding its monetary policy;
12:30 GMT – USA. First application for unemployment compensation;
12:30 GMT – USA. Markit composite purchasing managers’ index;
14:00 GMT – USA. New house sales

Friday, 24th of August
22:45 GMT – New Zealand. Trade balance;
22:45 GMT – New Zealand. Import/export;
23:30 GMT – Japan. Consumer price national index;
06:00 GMT – Germany. Gross domestic product (qtr/qtr) (second quarter);
12:30 GMT – USA. Durable goods orders excluding transport costs;
12:30 GMT – USA. Durable goods orders.

Author: Anthony Porter, IAFT Analyst

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