US equities stopped returned early profits and fell again due to geopolitical factors and decisive statements by several representatives of the FED. Geopolitical factors, like intention of North Korea at testing missiles and developing their own nuclear capabilities. While South Korea wants to protect itself and insists on the need for negotiations with the US and China regarding the THAAD missile defense complex.
FED’s members shows strong position is expressed in their confidence in the need to raise rates as soon as possible. They also speak of a second increase immediately after the first, as well as a reduction in the balance of the FED. Asian stock indices and indices didn’t follow the example of Wall Street and are traded in the green zone.
ASX 200 grew by 0.4%, recovering at the end of trading after a negative publication of the country’s annual budget. The Nikkei 225 closed 0.2% higher against the background of the depreciation of the Japanese yen. As a result of additional injections of cash into the market from the PBOC, Shanghai Comp grew by 0.3%.
The US dollar is traded in the green zone in the foreign exchange market. Of all the major currencies, only the British pound was able to reverse the direction of the trend against the US dollar. This is due to the fact that market participants rely on the aggressive nature of the meeting of the BOE, which will be held tomorrow.
EURUSD is trading at 1.0900, and USDJPY is trading at 114.50, after which it is consolidating again.
In commodities, gold continues to be hammered lower, as the bears recovered the support level of 1225 to test it as deeply as the support level of 1214, before the bulls surfaced for a repeat check of 1225 in the face of geopolitical tensions. Now bears are going to prevent a price increase above 1225, and then lower it to 1200. Further development of geopolitical conflicts or a drop in the US dollar’s rate can help to reach resistance level 1250.
Crude oil is traded in the range of 46-47 USD per barrel and market participants waiting for news the reduction in supply by producer countries.
Today, crude oil reserves in the US will come out, and this report may cause the range to break through. If it falls below expectations, we can see the black gold push higher and vice versa of the inventories print higher than expected.