Money Flows before the start of the European session

Early indications of major European futures point to a higher opening. At the moment, the pace is positive, which influenced yesterday the US stocks and last night in the Asian markets. Cash flows are diverted back to risky assets following positive rhetoric from the Trump administration. Markets are set for a positive development in trade negotiations, and at least temporarily they are able to rest. Investors did not miss the opportunity to escape from defensive assets.

Today we expect sentiment to remain positive. From a data perspective, the calendar is empty except for oil traders who will be waiting for API oil data later in the evening. Given this sentiment, we expect European stock market recovery to continue as well, though gloomy clouds loom over the Eurozone. Despite the German economy on the brink of recession, troubled Italy and the passive ECB, market players remain optimistic that the trade war will soon end.

Against the background of some appetite risk today, we expect gold to continue its downward movement and the yen and franc to continue to depreciate. Their depreciation will at least also raise the pressure of the BOJ and SNB due to the strength of the currencies and reduce the likelihood that they will intervene. However, there is also a great risk that trade war will turn into a currency. The US dollar is expected to recede today, and oil will benefit not only from the cheap dollar, but also from the slight rise in geopolitical tensions over the weekend. However, we have oil data later today, keep that in mind.

We also expect action today from Boris Johnson, who yesterday received another refusal by the Eurozone to renegotiate the deal. The pound is still in short-term consolidation until it is resolved. Or just the UK will be out on October 31 without a deal.

The risk appetite has also been improved due to the stabilization of the bond market and the yield curve, respectively. Market participants are accepting this signal to reduce the risk of recession.

Read more:

• Risk off after the escalation in the Middle East, markets are recovering in a period of calm
• The macroeconomic events for today’s trading calendar
• The US government has confirmed the attacks, Trump is calling an emergency staff meeting
• Has the war between Iran and the US started?
• US markets remain under pressure, traders await Iran’s response