Investors' Sentiment Has Improved due to Progress in the US-China Negotiations

The US dollar is strengthening against a basket of major currencies amid news from the United States and China. It is reported that the negotiators of the United States and China in Washington are developing several memorandums of intentions, which will form the basis of a large-scale trade agreement. These memorandums cover areas including agriculture, non-tariff barriers, services, technology transfer, and intellectual property. The enforcement mechanism is still unclear, but most likely, tariffs will be imposed if conditions are not met.

In addition, financial market participants assess the FOMC meeting minutes. Fed officials expect to end the reduction of assets on the Central Bank's balance sheet this year, but do not rule out the fact that the increase in the key interest rate can be continued. The President of the Federal Reserve Bank of San Francisco, Mary Daly, said that the US Central Bank probably would not hasten to increase rates until inflation strengthened. The dollar index (#DX) closed in the red (-0.06%) yesterday.

The British pound strengthened against the US dollar after a meeting between the British Prime Minister, Theresa May, and European Commission President, Jean-Claude Juncker. Officials met to agree on a soft Brexit finally. In general, the negotiations were successful and the officials agreed to seek an optimal solution for the exit, which would suit both parties.

The "black gold" prices are rising against the optimism in trade negotiations between the US and China. At the moment, futures for the WTI crude oil are testing the mark of $57.25 per barrel. At 18:00 (GMT+2:00), a report on crude oil inventories will be published in the US.

Market Indicators

Yesterday, there was a variety of trends in the US stock market: #SPY (+0.20%), #DIA (+0.27%), #QQQ (-0.02%).

The 10-year US government bonds yield is at 2.64-2.65%.

- German manufacturing PMI at 10:30 (GMT+2:00);
- Publication of the ECB monetary policy meeting account at 14:30 (GMT+2:00);
- Core durable goods orders in the US at 15:30 (GMT+2:00);
- Philadelphia Fed manufacturing index at 15:30 (GMT+2:00);
- Existing home sales in the US at 17:00 (GMT+2:00).

We also recommend paying attention to the speech by the Bank of Canada Governor.

by JustMarkets, 2019.02.21

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.