Stock market indices remain in the phase of a downward correction amid falling demand for risky assets. Interest in risk has decreased due to the following reasons:
- Deterioration of the epidemiological situation in Europe. A number of countries are introducing lockdown restrictions, and the UK is considering the possibility of introducing a national lockdown.
- In the United States, the confrontation between Republicans and Democrats has been intensifying over Trump’s desire to appoint a new Supreme Court judge. Against this background, the likelihood of reaching an agreement on a new package of economic support measures decreased.
- Shares of the banking sector fell significantly on Monday after the publication of documents indicating that a number of banks were conducting transactions with funds that could be obtained illegally. The documents mention such banks as Deutsche Bank, HSBC, JPMorgan, Barclays.
The dollar index rose to a monthly high on Monday due to increased demand for safe-haven assets. The dollar index was also boosted by a weaker euro amid comments from ECB President Christine Lagarde, who said that economic recovery in Europe is “very uncertain, uneven and incomplete.”
The pound fell sharply on Thursday as the Bank of England said it was considering imposing negative interest rates as the UK economy faces rising COVID-19 cases, higher unemployment, and the risk of no-deal Brexit.
The New Zealand dollar rose to a 1.5-year high on Friday amid positive comments from the New Zealand finance minister on the outlook for economic growth. On Monday, the New Zealand dollar lost ground as the dollar strengthened.
The price of oil rose on Thursday after OPEC stressed at a meeting that it would take action against members not complying with the deal on production cuts.
Oil companies are again forced to halt production in the Gulf of Mexico due to the tropical storm Beta.
Goldman Sachs predicts the oil market will be in a deficit of 3 million barrels per day by the fourth quarter and reiterated its target for Brent to reach $49 by the end of the year and $65 by the third quarter of 2021.
Main events of the current week
On Tuesday, data on US existing home sales will be presented. Bank of England Governor Andrew Bailey and Fed Chairman Jerome Powell will deliver speeches.
On Wednesday, German and UK manufacturing and services PMIs will be published, as well as data on crude oil inventories. The Reserve Bank of New Zealand will hold a monetary policy meeting. Jerome Powell will testify in Congress.
On Thursday, data on the German Ifo business climate index, US jobless claims, and new home sales will be presented. National Bank of Switzerland will hold a monetary policy meeting.
US durable goods orders will be released on Friday.
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