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- Varchev Finance: Trading day in one post 19.02.2018
Varchev Finance: Trading day in one post 19.02.2018
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Loading...Asian stock market: Asian indexes are traded on green territory. Japan's Nikkei posted a 1.72% increase. Australian ASX traded 0.66% increase. The biggest decline in the index was the oil sector. Shares of Santos are trading at 2.28% increase. Beach Energy shares added 7.11% to their value. But Woodside Petroleum dropped 6.26%. In the next few days China's markets will remain closed due to Chinese New Year.
FX Market: The USD remains under pressure despite better-than-expected inflation rates in the country. Despite the strong downward momentum, the price quickly recovered and the pair traded at a 3-year high. For now, the USD has managed to return some of its losses and is traded at about 1.24 against the euro. In the short term we remain negative against the dollar, mainly because of the EUR weight in the dollar index (about 57%). The EUR sentiment is stronger than the US dollar and this weakens the dollar against its other rivals. In the long run, we expect an increase in the US currency. The reason for this is the likelihood that the FED will raise the interest rate more than expected. If inflation continues to rise and unemployment remains at its record low, we are likely to see a strengthening of the dollar at the end of 2018 and early 2019. CAD: Remains among the strong currencies on the market. The high interest rate (1.25%) and positive economic data from the country suggest that the dominance of CAD will remain. We can also expect further interest rate increases by the end of 2018 if the country's economy continues to grow at a rate above expectations. Another factor for the strength of CAD is the high cost of OIL. The correlation between the two instruments is strong and positive. While OIL remains above $50 a barrel, the Canadian dollar will receive support. AUD and NZD - will remain weak for longer than their central banks wishes. 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: GOLD again failed to break the top made a few weeks ago. However, the price of precious metal remains high. Supported by the weakness of the dollar, GOLD is preferred by investors. We may see a decrease in the price if the risk appetite is again exacerbated and capital is withdrawn from GOLD and redirected to the stock market. OIL: Oil futures indicate that black gold is trading with increases during Asian hours. Brent oil is a 15 cent rise or 0.2% and WTI is a 5-cent rise or 0.1%. The petroleum sentiment remains positive for the moment. Although it is unclear what OPEC will decide at its next meeting, it is assumed that their agreement will not change until the end of 2018. This will most likely rebalance the oil market. Another important factor is the rising demand for crude oil on a global scale. We reported 2 weeks ago that China officially surpassed the US as the largest importer and consumer of black gold.
The European stock market: European benchmarks will start the week with increases. The German DAX will open with around 60 points increase at a price of 12540 euros, the French CAC with a 20 point increase in the price of 5300 euros and the UKX with a 15 point increase of 7300 pounds. The sentiment for European indices remained positive despite the sell-offs we saw 2 weeks ago. The economy of the Union continues to develop steadily and there is no reason to worry about a crisis. We remain positive about European indices.
American Stock Market: Money today in the US will remain prisons. Judging by US index futures, we can conclude that the correction is over, and risky assets are still in vogue. Rising inflation will stimulate consumption in the country, which in turn is positive for companies and hence for indices. We remain positive towards the US indices.
Economic calendar for the European and American trade sessions 19.02.2018
11:00 EU - Current account
12:00 EU - Construction output
The markets in US will remain closed today - President's day
The markets in Canada will remain closed today - Family day
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