Overview of the major global financial markets from November 5, 2014

The news that the Republicans gained a majority in the midterm elections pleased markets, as investors believe that their actions are more focused on the business and help the American economy grow. Of the major stock benchmarok suffered only Hong Kong Hang Seng, reacted to weak data from China. Japan’s Nikkei gained 0.56% at the end of trading day, but the Hang Seng lost 0.37%. Meanwhile, Britain’s FTSE rose by 1.32%, while Germany’s DAX — 1.62% and the DJIA and NASDAQ also showed positive momentum in the mid US session.

Unconditional Republican victory in the framework of the midterm elections to Congress forced investors to start buying new strength of the US dollar. News led USD / JPY for the next 7-year high of 114.83, although the pair finished the trading day at 114.60 area. EUR / USD under pressure down below 1.2500 news, and just rebounding from 1.2456 was able to recover in the region 1.2490 at the close. GBP / USD fell victim of two pressures: the forces of the US dollar and the weak results of the report on business activity in the services sector the UK (56.2 vs. 58.5). A pair of morning peak 1.6020 slid to an annual minimum of 1.5868, but was able to return to the area of 1.5970 at the close, thanks to a weak ISM data in the US service sector. USD / RUB Wednesday opened up a gap at 44.17 and continued to rise to a maximum of 44.99, returning to the area of 44.80 at the close. On the ruble pressed not only the growth of the dollar, but the Bank of Russia and the statement that he stops unlimited currency interventions to protect against speculative pressures on the domestic currency.

Yesterday, oil dropped their side to side and on hearsay, and facts. In the morning, the prices were under pressure in anticipation of increasing reserves and on rumors about lowering Saudi Arabia December prices. However, there are evening news showed lower than expected rate of growth of oil reserves in the United States supported the demand for oil. A little later reporting large oil pipeline explosion in Saudi Arabia only strengthened the demand for energy. As a result, Brent retreated from 4-year low of 82.19 to a 3-day high of 84.97 and closed in the area of 84.00.

Meanwhile, precious metals continued to incur losses on news of the victory of the Republicans. As a result, starting the day at 1168,76, XAU / USD to the end of trading day down to 1146.20 per ounce, on the road noting 4.5-year low at 1137.73. Meanwhile, XAG / USD down to almost 5-year low of 15.12, but did not go further, completing trades near 15.40.

Forecast for Thursday, November 6

Stock market

The first reaction of US stock indexes on the news of the victory of the Congress was the growth. However, today we can see the opposite trend, as the market may start to price normalization of interest rates. The fact that the Republican Party has always opposed the soft attitude of the Fed, and now likely to see aggressive intervention of the US authorities in the course of monetary policy in an effort to accelerate the transition to the regime of tightening. Thus, the more positive economic indicators we see in the US, the greater the probability that the rate hike will come earlier than planned, and, therefore, the US stock indices (S & P, NASDAQ and DJIA) will respond. Now they are at a peak, due to the ultrasoft policy regulator, so the news about tightening can in the coming weeks to provoke a turn down.


Gold prices continue to go down under the influence of too much positive news from the US and too high demand for the American currency. Republican victory only fueled the market’s confidence in the fact that more States expects a stable path of economic recovery. Expectations published this week a report on the labor market is only heated interest in the USD and increasing pressure on safe assets. Gold prices moved steadily down to around $ 1,100 an ounce. However, against the background of an asset is oversold still unstable global economic recovery could trigger a return of interest in the assets at the close of said support, and hence the levels of current and new lows on the way — this is a good entry point for bulls on gold.

Foreign exchange market

In light of recent events the ECB meeting is of particular importance. Fed completed a program of buying assets, and the Bank of Japan decided to further stimulation. Unlike the US and Japanese regulators where clearly there is a clear lead manager, the European Central Bank has to follow the interests of all countries at once E-18. That is why there are now articles that representatives of the governing board are unhappy working style Draghi, who prefers to make decisions without consulting and without informing others. Now there is talk that almost half of the board (made up of 24 members) opposes the program of buying bonds. Thus, the chances that the next meeting is going to happen, it is very small. In addition, a second auction will be held TLTRO month, and it may well be much more successful, and therefore, the ECB may just decide to wait for the results to make a final decision on the additional stimulus. If at the meeting, and in the press conference Draghi will not be any hints on timing of the new tools of monetary policy and the current state of the economy will be evaluated as «stabilizes», in EUR / USD has every chance to go up with the immediate goal at 1 , 2580.

USD / RUB again blew markets spike up in response to the decision of the Bank of Russia to limit the volume of foreign exchange intervention only 350 million dollars a day. Thus, the regulator wants some more «free» currency, partly to limit the influence of speculative factors. The fact that the Central Bank reserves the right in case of threat to the financial stability of the act, «not hesitating no rules», ie now speculative transactions will be even more risky and, therefore, can reduce the number of those wishing to take part in them. Perhaps this will limit the speed of the fall of the ruble in the coming days and may lead to a larger correction under more favorable economic conditions: the fall of the US dollar and the rise in oil prices. To date, the strong resistance level will remain the psychological mark of 45.00, but the primary purpose of the downward movement may act 43.90 and 43.40 below.


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Overview of the major global financial markets from November 5, 2014 | Web Trade For All - Forex trading, analytical reviews of the market and help for beginners