Financial markets continue to fever on the wave of geopolitical risks that seem to continue to lead them for a considerable period of time until a military conflict between the US and its allies and the DPRK begins, or there is an understanding that this is not a solution to the problem, that it's worth to finally sit down at the negotiating table.
The US dollar remains a hostage to the policy of D. Trump, as well as the high probability that the Fed will not decide once again this year to raise interest rates. Yesterday's statements by members of the Fed indicate that the balance is gradually shifting towards "pigeons" or supporters of a soft monetary policy. Fed spokesman L. Brainard said that it was necessary to raise interest rates even more slowly, and N. Kashkari's "patented pigeon" bluntly said that raising interest rates is damaging the US economy. He also added that the interest rates should not be raised further.
Here, on such an emotional and news background, trading on Wednesday is taking place in world markets with a decline in the US dollar against major currencies, with the exception of the Australian, New Zealand, and Canadian currencies. The Russian ruble is growing on the wave of continuation of the placement of government bonds by the Finance Ministry, which is the main reason for its strength due to the attractiveness of non-residents' game in the carry trade in the Federal loan bonds (OFZ).
The oil market resumed the rally on the wave of expectation that not only the consequences of Hurricane Harvey will noticeably reduce the flow of American oil to the world market, but also the possible military operations on the Korean Peninsula may cause interruptions in the supply of crude oil to world markets.
Another important event hinders the growth of positive sentiment among the market players: The expectation of the outcome of the Fed meeting on monetary policy, which may not give the market the expected result and they hope that the ECB will still make a decision to stop stimulating the euro area economy, the background of economic growth and rising inflationary pressures.
Forecast of the day:
The EUR/GBP pair is consolidating above the level of 0.9135, breaking through on the wave of the ECB meeting results, which may not be the benefit of the euro could lead to a local fall of the pair to 0.9000.
The pair USD/JPY is trading above the level of 108.50 on the wave of remaining geopolitical risks from the confrontation between the US and the DPRK. It can continue moving to 108.00.