Euphoria in the markets is often replaced by panic and vice versa. A typical example is the reaction of the US stock indices to the statements of the head of Donald Trump that the curtailment of tariffs is not a resolved issue.
China, given the slowdown in its national economy to its lowest levels in the past 57 years, wants a trade agreement more than the United States. The White House understands this and is fairly confident in the negotiations.
The S&P 500 index initially dipped in the comments of the American president, but then was able to win back most of the losses.
Demonstrating strength on the eve of the signing of a peace treaty, Washington wants Beijing to reduce its demand for rollback tariffs.
It's no secret that D. Trump closely monitors stock indices and strongly supports them. In the post-crisis period, the latter was fired twice after eliminating important constraints: in 2011–2014 after the debt crisis in Europe ended and in 2016–2018 after the "fire" on the Chinese securities market was paid off. If history repeats itself again, the high attractiveness of American assets will continue to be supported by the greenback.
Thanks to the "thaw" in trade relations between the United States and the Celestial Empire, as well as the Fed's preventive measures to weaken monetary policy, the US Treasury yield curve for the first time since November last year completely got rid of the inversion. Rates of the US debt market are rising, which indicates the strength of the country's economy and attracts investors. Confirmation or refutation of this may be the October release of US retail sales. According to the forecast of Reuters experts, the indicator grew by 0.2% in monthly terms.
Fans of the euro, by contrast, are seriously concerned about the possibility of a recession in Germany. Most likely, the German GDP will decline in July – September. However, the unexpected growth of German exports in September by 4.6% in annual terms may serve as a lifeline for the bulls in EUR / USD. If the largest eurozone economy still manages to avoid a recession, then this will be positive news for the single European currency.
This week, traders will also follow the speeches of US President D. Trump at the New York Economic Club and Fed Chairman Jerome Powell in the US Congress.
It is unlikely that the owner of the White House will want to drop the markets, and J. Powell, contrary to the opinion of most of his colleagues in the Federal Reserve, will begin to talk about lowering the interest rate. If the S&P 500 continues to grow, then the EUR/USD pair will close in the red zone for the second week in a row. The chances of implementing such a scenario will increase if the bulls fail to return quotes above the resistance level by 1.1040.
