The closer the Christmas holidays, the more noticeable is the fall in investor activity in the financial markets.
If earlier, traders had hoped that the conclusion of the first part of a trade agreement between Washington and Beijing could cause a growth in demand for risky assets, but, as the situation shows, it seems that the so-called "Christmas rally" that has been so loved by investors has happened for quite some time now.
Markets previously actively reacted to any important news on the situation with the negotiation process, which increased volatility and pushed the value of assets up and down. But by the time the "first phase" agreement was reached, investors were clearly tired of theatrical threats and praises of US President D. Trump regarding the entire topic of the negotiations. Moreover, it seems that there will no longer be any rally, and then most likely it will be local and quite weak, if there is a surge in activity and purchases of risky assets.
In this regard, a good indicator is the dynamics of gold quotes, which have been trading in a slightly downward range over the past four months, and the last four days have actually remained in place, despite some easing in the markets and increased demand for risky assets. Now, as we watch the quotes of the "yellow" metal, we can confidently consider it as an indicator of general sentiment in the markets. In turn, players of the market are clearly not in a hurry to get rid of it, but also actively buy it.
This can mostly be explained not only by those reasons. Some of which are described in a previous article, which mentioned trade negotiations between the United States and China, the prospects for the monetary policy of the ECB, as well as the real destructive consequences for the European economy of Britain leaving the European Union, but also by promoting the theme of impeachment by Trump's opponents in the United States. However, the risk still remains despite the fact that most experts believe that it will not have any impact on the markets, which, perhaps, pushing market players to exercise caution to a high degree.
As for the interesting events of today, the decision of the Central Bank of Japan was extremely predictable. In fact, traders have ceased to generally respond to published economic data from Japan and are considering its assets, as well as currency, through the prism of safe haven assets. Moreover, a meeting of the Bank of England will also take place today, where no change in monetary policy is expected. Regarding sterling, it can be noted that it will most likely decline on the wave of Britain's exit from the EU promised by B. Johnson before the end of January.
In general, we do not expect any noticeable changes in the markets by the end of this year.
Forecast of the day:
USD/CAD pair remains under pressure. Now, consolidating below 1.3115 may become the basis for its further decline to 1.3040.
USD/JPY pair is consolidating in the range 109.40-109.70 in the wake of the lack of visible drivers for both growth and decline. Thus, we expect that it can stay in this range until the end of the week.
