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The dollar continues to hold a leading position, while in Europe the degree of political opposition in connection with the events in Catalonia does not decrease. For the euro, the results of the last elections in Austria, where FPOE, the right-nationalist Austrian party of freedom won with the second place of 27.4%, could also be negative. The current winner Sebastian Kurtz announced his intention before October 26, the National Day of Austria, to decide on the formation of the coalition.
Investors continue to assess the publication of ambiguous indicators of the state of the US labor market. According to data released last Friday by the US Department of Labor, the number of jobs outside of US agriculture in September decreased by 33,000, for the first time since 2010 (the forecast was +90,000). Other parameters of the employment report were more optimistic. Thus, unemployment in the US fell more than expected, to 4.2%, reaching its lowest level since 2001. The average hourly earnings in the US in September increased by 0.5% (+ 2.9% compared to the same period of the previous year).
Last weekend Catalonia voted for independence from Spain, the Constitutional Court of Spain and the European Commission recognized the referendum as illegal. For independence, more than 90% of citizens who came to the polls voted. The situation can take the scale of the pan-European crisis. The euro reacted with the decline. So far, the sales volume of the euro is small, but if the situation with the referendum in Catalonia will worsen, then, probably, a more large-scale weakening of the euro is just beginning.
In Germany, the ruling party won, and Angela Merkel secured herself a fourth term in the Chancellor's chair. The party led by the Christian Democratic Union (CDU) will receive 33% of the vote in the German parliament; this is the weakest result for this party since 1949. None of the parties won a parliamentary majority. The surprise was that the extremely right-wing party "Alternative for Germany" won seats in the parliament, gaining more than 12% of the vote.
The result of the previous week was the continuation of the decline in the US dollar, which weakened amid concerns about natural disasters in the US and geopolitical tensions, as well as lower expectations about higher interest rates in the US this year. On Friday, the index of the dollar WSJ reached a minimum of more than two years. The ICE dollar index reached on Friday the lowest intraday level since January 2015, 91.01 and closed with a decrease of 0.3%, at the level of 91.35.
At last week's FRS conference in Jackson Hole, the leaders of the Fed and the ECB avoided speculating on the topic of monetary policy. After the speech Janet Yellen dollar fell in the foreign exchange market, and after the speech of the head of the ECB Mario Draghi (at 19:00 GMT), the euro rose sharply. Mario Draghi has not expressed concern about the strengthening of the euro since the beginning of the year.
Last week was marked by the second for this month, a sharp intraday decline in major US stock indices. The reason for this was a series of disappointing financial reports of American companies, which include large retailers and giants of the technology sector, as well as a terrorist attack in Spain, which killed more than 13 people, and more than 190 people were injured.
The past week was marked by a sharp increase in demand for safe haven assets amid escalating geopolitical tensions between the US and North Korea, which exchanged threats against each other. On Thursday, US President Donald Trump said that his previously voiced threats to respond to North Korea's "fire and fury" may have sounded "not tough enough". And already on Saturday, in a telephone conversation with French President Donald Trump, said that the United States is ready to strike if North Korea does not end the threats and testing of ballistic missiles.
The Core Consumer Price Index (Core CPI) determines the change in the prices of the selected basket of goods and services for a given period. Food and energy are excluded from this indicator to obtain a more accurate estimate. A strong result strengthens the US dollar, while a low one weakens. Forecast: + 0.2% in July (against + 0.1% in June).
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