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Stock Market Edges Higher As Investors Wait For US China Trade News

Today, USD is relatively calm since there is a lack of significant economic releases, and no new comments have been received on the signing of the US-China trade agreement. It is known that the parties continue to agree on details in order to finally resolve all disputed issues until the meeting between President Donald Trump and Chairman Xi Jinping at the APEC Summit in November. However, there are no details of the negotiation process. Yesterday’s data on sales in the US secondary housing market disappointed the market. For September, the index fell by 2.2% instead of the expected 0.7%, however, the data could not seriously put pressure on USD. USD is moderately strengthening against EUR and GBP but moves horizontally against the JPY.  The stock market is seeing record highs and on a 10 year bull run that has produced a 468% return.

Oil prices are moving within a downward correction.Oil prices are falling under the pressure of the API report, which recorded a new increase in US oil reserves by 4.450 million barrels to 437 million barrels. In the evening, the market awaits a corresponding report from the EIA. According to forecasts, crude oil inventories may continue to grow for the third week in a row and increase by 2.232 million barrels. The implementation of the forecast may affect the prices negatively.

Eurozone

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EUR is weakening against USD and JPY but moves horizontally against GBP.

Due to a lack of significant economic releases, European investors are still focused on the situation with Brexit. In the coming days, Brussels must decide whether to allow a new Brexit postponement after the British MPs refused to consider legislation allowing Britain to exit the EU within the next three days, as Prime Minister Boris Johnson suggested. EU President Donald Tusk said he would recommend EU leaders to accept the UK request and delay Brexit until January 31, 2020. Most likely, the postponement will be approved; although observers believe that the possibility of reducing its terms to put pressure on the UK is not ruled out. In the evening, investors are waiting for the publication of the EU consumer confidence index. It is predicted that the number of pessimists among European consumers will begin to increase; the figure could reach –6.7 points. The implementation of the forecast may put pressure on EUR.

United Kingdom

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GBP is weakening against USD and JPY but moves horizontally against EUR.

Investors are focused on the situation with Brexit. Yesterday, the British parliament fundamentally approved a new deal with the EU but refused to prepare legislation for Britain to exit the EU and ratify the agreement within three days, as suggested by Prime Minister Boris Johnson. Thus, the UK will not have time to prepare all the documents until October 31 and needs a new Brexit deferment, which is likely to be received. British media suggest that if the extension is approved until January 31, 2020, the government will try to hold early elections on December 5 or 12 to strengthen the Conservative Party’s position in parliament.

Japan

JPY today is strengthening against GBP and EUR but moves horizontally against USD.

Due to a lack of significant economic releases, JPY is trading under the influence of technical factors. Investors continue to wait for news on the trade deal between China and the United States and begin to prepare for the upcoming Bank of Japan meeting next week. Investors expect the regulator to take new measures to support the economy, as inflation continues to deteriorate, and raising the consumption tax to 10% from the beginning of October can seriously reduce consumer spending and put additional pressure on GDP. Market expectations seem justified since the head of the Bank of Japan Haruhiko Kuroda said earlier that the regulator would “certainly” lower interest rates if the economy needs it.

Australia

AUD is weakening against its main competitors – USD, JPY, EUR, and GBP.

Due to a lack of significant economic releases, AUD is trading under the influence of technical factors. It is worth noting the comments of the head of the Australian Treasury, Stephen Kennedy, who said that the current economic crisis does not require immediate reaction of the government, and also was cautiously optimistic about the prospects for the restoration of the Australian economy.

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