The market seems to be getting used to the fact that the Taliban has come to power in Afghanistan. After a two-day sell-off, stocks went up during the Asian session today. The US dollar is edging down against its main counterparts. Oil prices continue to recover.
The focus is likely to gradually shift from Afghanistan. Market participants will now concentrate on macroeconomic data and the FOMC Minutes.
Meanwhile, the consumer price index in the United Kingdom fell to 2.0% from 2.5% y/y and was at 0% in July, following a 0.5% increase in June. Likewise, the annual core inflation rate in the United Kingdom eased to 1.9% from 2.3%. Core consumer prices dropped to 0.0%, following a 0.5 percent gain in June.
Investors now await the release of inflation data in the eurozone. The reading is expected to remain unchanged.
The Reserve Bank of New Zealand held a meeting today. The regulator surprised the market when held its official cash rate (OCR) at a record low of 0.25% and did not raise it to 0.50%. It seems that New Zealand's central bank did not dare to get ahead of the Fed, the world's leading regulator. Perhaps the bank chose to wait and see whether the Fed would hint at the possibility of monetary policy changes.
Today, the focus is on the FOMC Minutes for June. Investors expect the regulator to hint at the possibility of early tapering and an increase in borrowings.
Why is it important for the market?
Some members of the Fed have already addressed the issue of changing monetary policy. The central bank may take a final decision based on the results of the voting. Such a possibility is believed to provide support to the greenback. Thus, the US dollar may go up if, for example, Jerome Powell clears speaks in favor of tapering at a symposium in Jackson Hole. Conversely, the greenback may go down if the Fed's char does not support monetary policy review.
As for stock indices, they are expected to advance after a two-day sell-off.
Outlook:
EUR/USD has reversed from the 1.1700 level. If the eurozone's inflation beats economists' forecasts, the quote is likely to rise to 1.800.
Gold is trading below 1795.00. If the price breaks this barrier in the wake of rising demand for risk assets, the precious metal may soar to 1830.00.
