MARKETS ARE CONSOLIDATING IN ANTICIPATION OF NEW STATISTICS AND DISCUSSION OF SUPPORT

M

My expectations regarding the inaugural rally of Joe Biden turned out to be correct. It is over now and investors fully turned their attention to the expected debate in Congress on the $ 1.9 trillion program of assistance to the American economy and citizens of the country proposed by the new president.

Equity markets moved in line with my expectations for consolidation. In addition to the implementation of the assistance program, the forthcoming reports on companies for the fourth quarter of last year began to play an important role. As for the general perspective dynamics of stock indices, I believe that it will fully depend on the success or partial success of the adoption of new incentives in the United States.

On Thursday, the ECB seemed to disappoint some market participants. Investors assumed that the regulator, leaving all the parameters of monetary policy, would nevertheless make it clear about concern about the high rate of the single currency. But he, in the person of his leader Christine Lagarde, stated only about low inflation, which cannot be pushed up to the target level of 2.0% and positive changes in the regional economy. Of course, Lagarde also spoke about other important fiscal policy issues, the impact of the COVID-19 pandemic on consumer demand. She touched on the euro’s exchange rate but said that the bank is “watching it closely.” That’s all. As a result of the meeting, the single currency received support against the dollar, albeit not so significant. The main role has already been played by the weakness of the American currency, which allows it to consolidate and not to fall like a stone.

Today, market attention will be drawn to the publication of data on business activity in Europe and America. If in Britain and in the Eurozone their slight growth is expected, in the States they are expected to decrease. According to the forecast, the index of business activity in the manufacturing sector PMI in the US in January should fall to 56.6 points against the December value of 57.1 points. The PMI PMI value in the US PMI in the current month should fall to 53.6 points against the December figures of 54.8 points.

What to expect soon:

I believe that locally bad values ​​can push the American indices and the European ones locally upward, as investors believe that the negative dynamics will spur the authorities to pursue support measures more actively. At the same time, good values ​​can lead to their decline due to lower expectations that prompt support measures can be taken, especially by Congress in America, as soon as possible


By Maksim FXbro