High market volatility will persist

The presence of New Year's holiday weekends has traditionally had a very noticeable chilling effect on financial markets. In the first trading session in the new year, all of our last year's fears manifested themselves, which resulted in high volatility in all segments of the world market.

As a result of yesterday's trading, the US stock market grew, although it all began very negatively with the opening of the trading session in the red zone. Crude oil prices rose, but, like the stock markets, showed high volatility.

In the foreign exchange market, the ICE dollar index added Wednesday, demonstrating the strengthening of the dollar against the currency basket, but today the US currency is declining, remaining under pressure due to the apparent unwillingness of investors to take risks in anticipation of the publication of updated data on the US economy, and primarily employment. Just as we have already indicated above, the limiting factor is the absence of a significant number of market players in the market due to their departure for the New Year holidays.

But there is one more important reason, the expectation by the markets of the outcome of the next negotiations between China and the United States on trade duties and the overall situation in trade between countries. There are some hopes here that are fueled by rumors and speculation that an agreement can be reached. It is likely that it was this factor that helped the US stock indexes to break through into positive territory yesterday.

After the release of extremely weak data on industrial production in China, there appeared hope in the markets that the Chinese would "break down" and go to the Americans for a meeting. But how it will actually, of course, time will tell, but for now, in our opinion, the overall picture of uncertainty will persist, producing high volatility. This applies not only to stock markets, but also to the foreign exchange market.

Forecast of the day:

The EUR / USD currency pair continues to be in the range of 1.1270-1.1460, consolidating on the wave of multidirectional forces that do not allow it to grow. This is a cautious position of the ECB regarding the monetary policy tightening process and the uncertainty of the real consequences of Brexit and the expected weakness of the dollar under the decision of the Fed to make a pause in raising interest rates, as well as slowing the growth of the American economy. Today, against the background of the publication of data from ADP on employment, the pair may in the future both grow to 1.1460, breaking the mark of 1.1400, and continue to decline to 1.1270 after falling below the level of 1.1350.

The USD / JPY currency pair, also on the wave of statistics from the USA, may either rise to 109.50 or fall to 106.80.