The events yesterday reflect our current view of the situation in the global markets, where a high intraday volatility was noticed amid multi-directional factors that continue to have a significant impact on investors' behavior. We have already pointed this out in detail earlier, while economic statistics from both Europe and the US, which investors have almost stopped paying attention to, should cause concern.
As a result, the economic statistics in the US presented the day before turned out to be generally negative. Investors approached their assessment selectively, which influenced the rebound of US stock indices. Market players noted a slight improvement in the number of unemployment claims – it declined to 803,000 against last week's revised downward value of 892,000 and forecasted decline of 885,000. The market also liked the total number of people receiving benefits for unemployment, which fell from 5,507,000 to 5,337,000. However, that was everything, which means the optimism was short-lived.
Other important indicators showed negative dynamics. November's basic orders for durable goods declined to 0.4% against the October value of 1.9% and forecasted decline of 0.5%. In annual terms, the base price index of personal consumption expenditures maintained a growth rate of 1.4%, although it was expected to increase by 1.5%. Moreover, November's monthly value of the indicator showed no growth, although it was expected to rise slightly by 0.1% against the October figures of 0.2%.
At the same time, the data for income and spending of Americans also turned out to be disappointing, as the indicators have dropped markedly. In particular, revenues declined by 1.1%, against expected decline of 0.3%, while expenses fell 0.4% against the forecasted 0.2%. In addition, new home sales declined to 841,000 against forecasted growth to 995,000.
Nevertheless, it was noted that investors were not bothered by these data, since they are completely focused on the upcoming economic growth following the mass vaccination in the US, paired with the continuing massive support measures. They believe that these will contribute to continued demand for company shares and as a result, the resumption of the US dollar's decline. But only time will tell how things will turn out to be. In turn, we still believe that the current market condition will continue until the new year.
As for today's possible dynamics of the markets, it will be influenced by a short trading session in both Europe and the United States amid Christmas Eve, which is before the Christmas day on Friday, when all significant global markets will be closed.
Forecast of the day:
The GBP/USD pair is trading higher above 1.3535 amid reports that the UK has made significant concessions to the EU on Brexit. This could be the prologue to the trade deal and other important issues between both parties. We believe that if the pair holds above the level of 1.3535, further growth can be expected to 1.3625.
Spot gold is trading above the level of 1872.50. The expected weakening of the US dollar, as well as consolidation above this level, may contribute to the price's further rise to 1900.00.