The market focuses on the topic of the actual coming to power of the Taliban in Afghanistan for the second day in a row. This has caused a big wave of tension, as investors are afraid of the likelihood of its further expansion to nearby regions and countries.
The news from Afghanistan brought down world stock indexes, with the exception of the US DOW and S&P, which updated new highs, supported by increased expectations that the US economy will resume growth after a pause.
Meanwhile, crude oil prices are trading in different directions amid the problems of the COVID-19 pandemic and the growing geopolitical tensions in the Middle East. The North Sea Brent crude oil brand is under pressure, while the US benchmark WTI brand is receiving support.
What is the reason for this divergence in price movements?
We believe that this is caused by fears of the direction of terrorist activity of the new Afghan authorities to Western countries. Europe is the closest, not the United States.
Commodity and commodity currencies remain under pressure in the currency market. The New Zealand and Australian dollars, which are sensitive to price movements in the commodity market, are falling most noticeably. The AUD is declining under the pressure of the publication of the minutes of the last RBA meeting, while the NZD is falling, despite the expectation of an increase in the key interest rate of the RBNZ from 0.25% to 0.50% at the next meeting.
The ICE dollar index is just below the 93.00 point mark.
The protective currencies such as the yen, the franc, and the US dollar, as well as gold, receive support.
We expect that the current trends in the markets will continue, while a new fear of revenge against the West from the Taliban, who seized power in Afghanistan, will hang over them.
Additional negativity for the stock markets is the statements of some Fed members about the need to start the process of reducing the repurchase of assets – government bonds and mortgage securities as early as September. Investors are waiting for the speech of J. Powell and the publication of the minutes of the Fed's July monetary policy meeting.
Forecast of the day:
The AUD/USD pair declined below the support level of 0.7300 amid internal economic problems in Australia and external negative factors related to the situation in Afghanistan. We expect the pair to further fall to the level of 0.7225.
Gold continues to gain support amid geopolitical tensions and demand for defensive assets. A price consolidation above the level of 1792.00 will lead it to further growth to 1831.00.
