There is already an increase in positive sentiment after yesterday's mixed dynamics on the world markets, which pushes up the Asian stock indices, as well as futures on the main European and American stock indices, prices for commodity assets, and puts downward pressure on the US dollar.
In our opinion, an important factor that supports the demand for risky assets, despite the weak economic data from Europe and the US published on Monday, is the complete withdrawal of American troops from Afghanistan, which significantly reduces the risk of escalation of tensions in the Middle East. We believe that the United States will now have no desire to carry out active destabilizing actions in the region, which in turn, reassures investors.
This event, paired with Powell's dovish speech on the prospects for monetary policy at the Jackson Hole symposium, supports the demand for risky assets and puts pressure on the US currency.
Based on this, we expect the rally in global stock markets to resume today. Crude oil prices will rise, awaiting the publication of data on oil and petroleum products from the American Petroleum Institute, which suggests a decline. The dollar exchange rate is under pressure from the decline in the yield of treasuries. Thus, the yield of 2-year Notes sensitive to changes in the level of interest rates is declining at morning electronic trading, continuing the decline that began at the end of last week. They are also followed by the yield of 10-year treasuries.
The market seems to be focusing on geopolitical news from Afghanistan and the Fed's decision not to raise interest rates in the near future, which supports it. This is happening despite the weak economic data that came out on Monday from Europe and the United States and this morning from China.
Assessing the shift in investor sentiment from negative to positive, we believe that we will see the growth of stock indices at the opening in Europe and America today. A local weakening of the dollar and an increase in crude oil prices can also be expected. Tomorrow, all the attention of the markets will be turned to the latest employment data from ADP, which will traditionally precede the publication of official unemployment figures from the Ministry of Labor on Friday.
Forecast of the day:
The EUR/USD pair is trading above the level of 1.1800. The growth in demand for risky assets amid the lowering geopolitical tensions in the world after the withdrawal of the US soldiers from Afghanistan, the weakening of the US dollar, and an increase in positive market mood support the pair. Thus, we expect it to rise to the level of 1.1900.
The USD/CAD pair declined below the level of 1.2580 on the wave of renewed growth in crude oil prices. A consolidation below this level will lead the pair to further fall to 1.2490.
