Investors Are Focused on Geopolitical Events

Yesterday, the US dollar recovered some losses against a basket of major currencies. The dollar index (#DX) closed in the positive zone (+0.18%). Financial market participants evaluate the news flow. Fed Chairman Powell confirmed that the regulator would adhere to the "dovish sentiment" in relation to monetary policy and would not raise the interest rate in the near future. The US currency was supported by positive economic data. Thus, pending home sales index in the US rose by 4.6% in January instead of 0.8%, as experts expected.

The Chinese yuan weakened against the US currency after the release of weak economic statistics. Today, during the Asian trading session, Chinese manufacturing PMI has been published, which has counted to 49.2 in February and has occured to be worse than the expected 49.5. This suggests that the difficult trade relations between the US and China have a negative impact on the economy of China.

At the moment, investors are focused on the relationship between US President Donald Trump and DPRK leader Kim Jong Un. As it became known, the leaders met yesterday in Vietnam but did not reach an agreement. Let us recall that the United States tried to achieve the denuclearization of the DPRK. Earlier, Trump promised to provide security guarantees for the DPRK, and Kim Jong Un – to help the United States return home the remains of US service members who were taken as prisoners during the Korean War. However, Kim Jong Un demanded in response to cancel the US sanctions against North Korea completely, but Trump did not agree to do that.

Also, financial market participants are concerned about the conflict between India and Pakistan. Yesterday, countries announced that they launched air strikes on each other's territory for the first time since the war in 1971. The conflict between India and Pakistan began to escalate since mid-February when Indian military police officers died due to a suicide murderer's attack in Kashmir. The militant group Jaish-e-Muhammad claimed the responsibility for that.

The "black gold" prices have been declining after a sharp rise during yesterday's trading session. At the moment, futures for the WTI crude oil are testing $56.75 per barrel.

Market Indicators

Yesterday, the bearish sentiment was observed in the US stock market: #SPY (-0.04%), #DIA (-0.26%), #QQQ (-0.06%).

The 10-year US government bonds yield has been growing. At the moment, the indicator is at the level of 2.66-2.67%.

- Preliminary data on US GDP at 15:30 (GMT+2:00);
- Initial jobless claims in the US at 15:30 (GMT+2:00).

We also recommend paying attention to the speeches by the FOMC representatives.

by JMarkets, 2019.02.28

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.