Daily Economic news by ForexMart

[AppleFXMart]

Australia Central Bank Maintains Cash Rates at 1.5%

The Australian Central Bank released a statement on Tuesday that it will be maintaining its cash rates at 1.5%, a decision that is expected among financial market players as the central bank is still in the middle of assessing the effects of its previous cash rate cuts in May and August.

The RBA made this particular statement during its policy meeting which is held every month. Analysts are expected little if not completely no change for the RBA during the week.

[AndreaFM]

Sluggish Growth of Japan Services Sector in May, New Orders Declined

Japan’s services sector activity rose at a sluggish pace in May than the previous month given the expansion of new orders at the slowest pace since September 2016, based on the private survey on Tuesday. This implies that the economy has lost its momentum in the second quarter.

However, the business confidence increased to the highest for four months in April as the companies launch new products to give way for the expected increases in the future demand.

The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) declined on a seasonally adjusted basis to 51.0 in May from 52.5 in April.

Moreover, there is a rising concern on the lesser demand conditions as new sales rising but at a subdued rate in 20 months, according to an economist at IHS Markit, Joe Hayes, who gathers the survey.

To sustain the business activity, firms started to clear the “backlogs of work”. High business activities dropped for the first time in the first five months of the year.

The composite PMI, which includes both manufacturing and services, decreased to 51.7 from 53.1 in April.

Japanese manufacturing activity rose in May at the slowest rate in seven months due to cooled down new orders based on the revised survey on Friday. This implies lesser domestic demand of the country. Hence, the economy weakened in the first quarter that ends the growth for eight consecutive quarters, which was the longest steady growth since the 1980s bubble economy.

Since the end of the first quarter, the negative outcome on factory data induced uncertainty on the rate of recovery by the economy.

[AndreaFM]

SNB Keeps an Ultra Loose Monetary Policies

The Swiss National Bank announced the decision to maintain an ultra-loose monetary policy on Thursday and analysts expectations matched from the survey by Reuters giving a unanimous answer.

They reiterated the fragility or exchange rates after the strengthening of the Swiss franc in the past few weeks and began low this year.

At the same time, Chairman Thomas Jordan said that it would be too early to raise rates in Switzerland amid low inflation.

Another issue is the political uncertainty in Italy which will affect the eurozone in the future and it is important for the central bank to be heedful in this situation, according to an analyst.
Forty experts expect the SNB to maintain the target range to be 1.25 percent to minus 0.25 percent in three months on the offered rate of London Interbank, which has been the ongoing target for the past three-and-a-half years.

Also, they expect a negative interest rate of 0.75 percent deposits to be sustained where the commercial bank held a certain value as one of the important tools used by the bank.

Changes in the LIBOR target range is anticipated to happen soonest at the end of the year based on the UBS, while the median consensus deems to set at the end of next year.

Analyst of Credit Suisse initially thought the central bank to raise their rates as early as 2019 based on the economic strength of Switzerland, with a forecast growth of 2.2 percent this year.

The Global Head of Investment Strategy & Research at Credit Suisse Group AG, Nannette Hechler-Fayd’herbe said, “Our base case scenario is where the ECB is considering a first interest rate increase themselves by mid-2019, and the SNB could move a quarter before.” Connoting the reaffirmation of central bank’s decision. However, she added that these two would move together as they are ‘economically interlinked’.

Her expectation is a gradual increase of rates until it reached around 1.20 against the euro in a year.

[KostiaFM]

08.11. Gold shows worst indicators in two years

Gold prices continue to show the worst performance over the past two years, responding to positive news on the settlement of trade differences between the US and China. Today, gold futures for December delivery fell to $1,457.10 per troy ounce, plummeting from the $1,493 area. Such lows were the biggest loss since 2017.

The pressure on the precious metal was exerted by news about the mutual abolition of US and Chinese duties. The elimination of duties is one of the main conditions for concluding the first stage of a trade deal. Success in negotiations supports the full range of risky assets, and gold, as a rule, moves in the opposite direction from risk.

Additional pressure on gold was exerted by the news that the People's Bank of China, being a constant accumulator of gold bullion, was not able to replenish its reserves again in October.

[KostiaFM]

11.11. Oman believes non-OPEC will extend the deal to reduce oil production

Oman’s energy minister Mohammed bin Hamad al-Rumhy said today, that OPEC and non-OPEC producers will probably extend a deal to limit crude supply, but the oil production will be kept at the current level (1.2 million barrels per day).

The minister also noted, that oil demand was improving lately as trade tensions soften and that Oman was satisfied with current oil prices.

The Organization of Petroleum Exporting Countries (OPEC), Russia and other allies have agreed since January to reduce oil production by 1.2 million barrels per day to maintain the market. Nowadays the experts see signs of improvement in the situation with balance of demand and supply in the oil market, fear of recession is getting lower, and optimistic signals about a trade agreement between the US and China make unnecessary the further reducing measures.

[KostiaFM]

12.11. The world’s largest trade deal could be signed in 2020

After more than 6 years of negotiations, a group of 15 Asia-Pacific countries is going to sign the the world’s largest trade agreement in 2020. The deal is called Regional Comprehensive Economic Partnership (RCEP) and it will involve all 10 countries from the Association of Southeast Asian Nations (ASEAN) bloc and five of its major trading partners: Australia, China, Japan, New Zealand and South Korea. The United States are not to be the joiner to the RCEP.

Initially India planned to join the mega-deal, but later decided to abstain from participation in trade pact over concerns that it would hurt domestic producers.

In any case, the 15 member-countries make up close to one-third of the world population and global gross domestic product.

So, the uniting within the RCEP would boost trade throughout the group by reducing tariffs, standardizing customs rules and procedures and expanding market access, especially among countries that have not concluded trade agreements.

[KostiaFM]

13.11. The results of D. Trump’s speech at the Economic Club of New York

Yesterday in a speech to the Economic Club of New York US President Donald Trump announced the «imminent» prospects of completing the first phase of the trade deal with China, but did not provide any new details about the talks.

The president’s speech disappointed investors, as they awaited any important political statements to be made. But Trump didn’t announce the place and date of signing a trade deal with Chinese President Xi Jinping, as it was expected before. Instead of this American president threaten to «very substantially» raise tariffs on Chinese goods if China does not make a deal with the United States.

Along with this Trump noted, that the US would only accept the deal if it served the interests of his country, American employees and companies.

The biggest part of president’s speech was devoted to success of White House administration. Trump said his staff had worked hard to bolster the economy despite of «too many interest rate hikes by the Federal Reserve».

[KostiaFM]

19.11. Global stocks hit two-year highs

Today world stocks reached two-year highs, as investors still believe that the US and China will be able to close a deal and put an end to a destructive trade war. The two largest economies in the world are negotiating a deal, which must end the 18-month trade conflict that shook global markets, but at the same time Washington is intending to introduce additional duties on Chinese goods on December 15.

Despite the lack of clarity on the progress of the talks, investors are encouraged by the growing hopes to reduce recession risks. Moreover, monetary easing by large central banks, such as China, has also helped to strengthen investors sentiment towards stocks.

Thereby, the global MSCI index, which tracks stocks in 47 countries, added 0.1%, reaching the highest level since last January. European stocks also rose: Euro STOXX 600 added 0.4%, peaking since July 2015. Indices in Frankfurt (GDAXI) and London (FTSE) rose 0.4% and 0.5%, respectively. Futures on Wall Street (ESc1) also showed a positive start, adding 0.2%.

[KostiaFM]

20.11. Trump says China tariffs will go «even higher» without deal

On Wednesday, American futures fell after US President Donald Trump again threatened to increase duties on Chinese goods if the parties did not sign a trade deal in the near future.

«If we don’t make a deal with China on our terms, I will raise the tariffs even higher», – Trump told reporters at the meeting in the White House. Trump’s message frightened investors and made them turn to defensive assets.

Moreover the most of US futures showed decline. In particular, the Nasdaq 100 index fell 41 points or 0.5%, Dow futures lost 103 points or 0.4%, and S&P 500 futures fell 10 points or 0.4%. Urban Outfitters Inc shares fell 16.1%, Pacific Gas lost 4.7% at the premarket, while Micron shares declined by 1.3%.

[KostiaFM]

21.11. Russia expects Nord Stream 2 to begin operations in mid-2020

Deputy Prime Minister Dmitry Kozak said that Russia’s Nord Stream-2 gas pipeline is expected to begin operations in mid-2020, despite opposition from some European countries and the United States.

The States affirm that the gas project will increase Europe’s dependence on Russian gas, which runs counter to the interests of the White House. As a result, the United States were putting pressure on European countries to slow down the Russian project.

For example, Denmark issued a permit to build a gas pipeline in the country's exclusive economic zone only at the end of October. Earlier, the Russian president called on the Danish authorities not to succumb to pressure from the United States and to defend their sovereignty.

Recall that Nord Stream-2 will run along the bottom of the Baltic Sea from the coast of Russia to the coast of Germany. The throughput of the pipe is 55 billion cubic meters of gas per year. The project cost is estimated at 10 billion euros.

[KostiaFM]

22.11. European markets lost growth after weak PMI

On Friday, European stock markets slowed earlier growth. It was caused by the publication of the weak preliminary business activity index (PMI) in the Eurozone, which didn’t show the visible improvement in the economy of the region, still weighed down by the trade conflict between the US and China.

According to IHS Markit, in October, the composite business activity index in the European Union fell from 50.6 to 50.3, fell short of the expectations for an improvement to 50.9. Data from France and Germany showed that manufacturing PMIs were stronger than expected, but service sector activity slowed sharply.

Christina Lagarde, the new president of the European Central Bank noted, that she was not intended to sharply change the monetary policies of her predecessor, Mario Draghi. And judging by the shares, banks are confident that in the near future easing of monetary policy will not happen.

[KostiaFM]

25.11. Former New York City Mayor Mike Bloomberg officially announces he's running for president

The billionaire former mayor of New York City Michael Bloomberg officially announced on Sunday that he was running for president in 2020 as a Democrat.

Earlier Michael Bloomberg, whose fortune is estimated at $45 billion, abandoned the idea of ​​running in the presidential race after former US Vice President Joe Biden (who was seen by everyone as an unconditional leader) went to the polls. But in the last two months, Biden’s position has been shaken and Senator Elizabeth Warren, of extremely left-wing views, began to take the lead.

But this was not long and soon Warren began to lose to the incumbent US president. This fact made Democrat-centrist Michael Bloomberg take the decision to return to the presidential race.

The billionaire said: «The US cannot afford four more years of President Trump's reckless and unethical actions. He represents an existential threat to our country and our values. If he wins another term in office, we may never recover from the damage».

So, on Sunday there appeared the first pre-election video of Michael Bloomberg started on television – he spent $34 million on this advertisement, which will be broadcast on the air for another week. It is noted, that Bloomberg is going to finance the campaign completely from his own funds and not accept donations.

[KostiaFM]

26.11. Oil gains on optimism in US-China trade talks

According to trading data, world oil prices began to rise today amid optimism around the prospects for trade relations between the US and China. Additional support for oil quotes is provided by expectations of the OPEC+ meeting in early December. The current Brent oil price is $63.18 per barrel.

Washington-Beijing trade relations continue to affect the oil market. Top US and Chinese trade negotiators held a phone call on Tuesday: Deputy Prime Minister He, the US Minister of Finance S. Mnuchin and the sales representative R. Lighthizer reached an agreement on many issues, including the cancellation of part of the tariffs. The optimism that the trade conflict will at least ease somewhat is currently preventing prices from falling.

Traders are also waiting for news on the prospects of the OPEC+ deal. The OPEC and OPEC+ meetings will be held December 5-6 in Vienna. Last week, Russian Energy Minister A. Novak said it was too early to talk about extending the OPEC+ deal. At the same time, Reuters reported, citing sources, that OPEC+ could extend an agreement to reduce oil production immediately until June at a meeting in December.

[KostiaFM]

27.11. US GDP growth revised up to 2.1%

According to the press release from the US Department of Commerce, the US economy grew at a 2.1% annual pace in the III quarter, which exceeded forecasts. Analysts expected to maintain the indicator at the level of the first estimate of 1.9%.

In the first quarter of 2019, the American GDP growth in annual terms amounted to 3.1%, in the second – 2%. In the 2018 the figures were the following: in the first quarter the growth was 2.5%, in the second quarter – 3.5%, in the third – 2.9%, in the fourth – 1.1%.

Economists believe that economic growth was caused by a stronger pace of inventory accumulation and a less steep decline in business investment.

[KostiaFM]

28.11. Bitcoin grows after drawdown the previous days

After a drawdown amid the news about the hacking of the Upbit exchange, the price of bitcoin showed a sharp increase. The current cryptocurrency quote is $7,622. The total market capitalization surpassed the $200 billion mark, the dominance index rose to 66.6%.

Earlier, the Bitcoin exchange rate crashed to the level of $6,553 after the South Korean cryptocurrency exchange Upbit confirmed the fact of hacking. Hackers stole 342 thousand ETH ($48.2 million) from a hot wallet. All assets, were transferred to cold wallets. The exchange intends to indemnify in full.

Some observers are sure that an insider worked among the exchange’s employees, since the attack was carried out at the time the exchange moved funds.

[KostiaFM]

29.11. Eurozone inflation rises quicker than expected in November

According to preliminary estimates of European statistical agency Eurostat, annual inflation in 19 countries of the Eurozone in November jumped to 1% from 0.7% in October. Analysts predicted acceleration of inflation to 0.9%.

A year earlier, in November 2018, annual inflation in the eurozone was 1.9%. According to preliminary estimates, core inflation in November amounted to 1.3% against the level of October at 1.1%.

The acceleration of inflation in the region was caused by a rise in food and services prices. Core inflation excluding food and energy prices picked up to 1.5% from 1.2% a month earlier, beating expectations for 1.3%. The inflation excluding alcohol and tobacco prices, accelerated to 1.3% from 1.1%, ahead of forecasts for 1.2%.

[KostiaFM]

02.02. China imposed sanctions against a number of US organizations

According to a statement by representatives of the Ministry of Foreign Affairs of the People's Republic of China, the Chinese authorities imposed sanctions on US non-governmental organizations for «supporting extremist activities» in Hong Kong.

The sanctions affected Human Rights Watch (HRW), the National Democratic Institute for International Affairs, and Freedom House. The Chinese authorities also decided to suspend the review of requests by US military ships and aircraft to visit Hong Kong.

The MFA explained that the reason for the sanctions was the US-approved law on the protection of human rights and democracy in Hong Kong. China took this as a serious violation of international law and interference in the internal affairs of China.

Recall that the protests in Hong Kong began in late March due to dissatisfaction of residents with the draft law on extradition to China. After the revocation of the bill the demonstrations did not stop. US President Donald Trump signed two bills in support of protesters in Hong Kong on November 27, despite Beijing’s repeated objections.

[KostiaFM]

03.12. Trump: The deal with China will have to wait until the 2020 elections

U.S. President Donald Trump noted that he could postpone the signing of a trade agreement with China for an indefinite period, until the US presidential election in November 2020. Such news alarmed the markets, depriving hopes for a quick resolution of a trade dispute, that slows down the global economy.

At a meeting with reporters, Trump said that he was ready to wait until the election. At the same time, the American president continues to insist that the deal should fully comply with the interests of the United States, otherwise it simply may not take place.

Following Trump's comments, stock prices in Europe and the Chinese yuan fell to local lows.

[KostiaFM]

04.12. U.S. private sector job growth slows down sharply in November

According to the press release from the analytical company Automatic Data Processing (ADP), U.S. private-sector employment increased only 67,000 in November.

The gain was well below forecasts from economists who expected a gain of 156,000. It turned out to be the smallest gain since May. Prior to the ADP data, analysts expected Friday’s government report will show 189,000 jobs created in November up from 128,000 in the prior month.

In the small business sector the number of jobs increased by 11 thousand, medium-sized companies with 50-499 employees increased their staff by 29 thousand, and large companies created 27 thousand new jobs.

[KostiaFM]

05.12. The number of filing applications for unemployment benefits in the US fell by 10 thousand

According to the report of the US Department of Labor, the number of Americans filing applications for unemployment benefits unexpectedly fell last week ending November 30, hitting their lowest level in seven months. The indicator decreased by 10 thousand compared to the previous week and amounted to 203 thousand.

The indicator of the previous week amounted to 213 thousand.

Analysts had expected the number of initial applications to grow by 2 thousand compared to the previous week and will amount to 215 thousand.

[KostiaFM]

12/6. U.S. unemployment falls to 3.5%, wages gain steadily

According to the US Department of Labor, US unemployment in November fell to 3.5%, the lowest level since December 1969. October indicator was fixed at 3.6%.

The number of jobs in the non-agricultural sector of the United States increased by 266 thousand people, which also became the maximum growth indicator since January of this year. Analysts predicted an increase in jobs by only 180 thousand. It is noteworthy that the previous value of the indicator was revised upward from 128 thousand to 156 thousand.

The average hourly wage rate in monthly terms increased by 0.2% (the consensus forecast assumed growth by 0.3%). At an annual rate, the indicator increased by 3.1%.

Strong labor market data provided significant support to the US dollar, allowing it to regain positions against many opponents in the Forex market.

[KostiaFM]

10.12. Oil prices are in the red amid worries about a trade war

Oil prices continue to decline on Tuesday, as concerns over slowing demand outweighed optimism after reaching an OPEC + agreement to increase production cuts in early 2020.

Futures for Brent fell to $63.80 per barrel, and futures for US light oil WTI – to $58.65 per barrel. Experts note that the euphoria over the decline in oil production was short-lived, and an unexpected drop in exports from China underlined the effects of the trade conflict. Exports from China in November fell by 1.1% year on year, while analysts had expected growth by 1%.

Moreover, since the start of the OPEC agreement to reduce oil production, the United States has been able to increase production by 4 million barrels per day. Members of the organization understand that the United States can either completely push them out of the market, or OPEC countries will have to increase production, which will immediately bring down the oil market.

[KostiaFM]

11.12. US inflation firms in November

According to the Labor Department, U.S. consumer prices increased solidly in November by 2.1% compared with the same month the previous year. Thus, inflation accelerated compared with 1.8% in October and reached its maximum rate over the past year.

Consumer prices rose 0.3% from the previous month after rising 0.4% in October. Analysts predicted an increase of 2% in annual terms and 0.2% monthly.

Prices excluding the cost of food and energy (Core CPI) in November rose by 0.2% compared to the previous month and by 2.3% compared with the same month last year. Both indicators coincided with the average expectations of analysts, as well as with the October changes.

The growth rate of food prices in the USA in November slowed down to 1.9% in annual terms from 2.1% a month earlier, medical care – to 4.2% from 5.1%.

The average hourly wage of Americans adjusted for inflation last month increased by 1.1% year on year compared with the revised 1.4% in October.

Energy prices jumped 0.8% in November from the previous month.

Such data could support the Federal Reserve’s intention not to cut interest rates again in the near term after reducing borrowing costs three times this year.

[KostiaFM]

12.12. China and US negotiate ahead of new round of tariffs

The Chinese Ministry of Commerce said today that Beijing and Washington are in close contact on a further trade agreement. At the same time, the Ministry declined to comment on possible retaliatory steps if the United States imposes additional tariffs on imports from China this week.

On Sunday, December 15, the US is due to introduce new fees for almost $160 billion of Chinese imports, including video game consoles, computer monitors and toys. Today US President D. Trump intends to meet with top trade advisers to discuss this step. If a decision to impose tariffs is nevertheless made, it could disrupt US-China talks to end the 17-month-long trade war between the world's two largest economies.

The future of today’s discussions is not yet known, however, in the case of the introduction of American tariffs, China intends to apply a tough response: restoring of 25% tariff on US-made vehicles and 5% tariff on auto parts. Fees for many goods will also be involved, ranging from corn and wheat to small aircraft and rare-earth magnets.

[KostiaFM]

16.12. Trump may become the third US president impeached

This week U.S. President Republican Donald Trump is likely to become the third U.S. president faced with the impeachment. Previously, Andrew Johnson and Bill Clinton had already undergone a similar procedure, in 1868 and 1998 respectively, but they were not convicted by the Senate. Richard Nixon voluntarily resigned in 1974 as soon as his impeachment process had began.

D. Trump is accused simultaneously on several points: of abuse his power during the Ukrainian scandal and of obstructing Congress' investigation into the matter. As stated earlier, the American president was trying to force Ukraine to investigate his political opponent Joe Biden. However, the head of the White House denies all the blame, saying that «there was nothing done wrong».

Voting in the House of Representatives will take place this week, and the Democrats are expected to win, as the decision to impeach requires a simple majority. As you know, the advantage of the Democratic Party over the Republicans is 36 seats. However, for the final removal of the president, this decision must be supported by two-thirds of the Senate members, where Republicans have 53 out of 100 votes.

[KostiaFM]

17.12. The price of palladium topped $2 thousand per ounce

The cost of palladium today set a new historical record, exceeding $2 thousand per troy ounce.The price of the metall in the morning hours reached $2000.5, subsequently rolling back to $1945.45.

Experts attribute the rising cost of palladium to concerns about metal supplies. Also, the rise may be due to a sharp increase in demand in the automotive industry in Europe and China. Palladium is used in the manufacture of exhaust catalysts for gasoline engines, and since the largest countries are tightening environmental requirements for vehicles, demand for metal will continue to grow.

Last week the price of palladium once updated its historic high at $1914, for the first time overtaking the price of gold.

[KostiaFM]

18.12. Kazimir: Weak eurozone growth could last for years

European Central Bank Governing Council member Peter Kazimir said, that the eurozone economy may remain weak until the block solves a number of structural problems.

Kazimir, who is also the head of the Central Bank of Slovakia, also noted, that the EU is lagging behind in technology, that prevents the bloc from achieving significant economic growth. Moreover, in order for the European economy to show signs of strengthening, it is necessary to complete the European Monetary Union.

Another Governing Council member Madis Müller said, that the regulator should consider reducing inflation control. «We could be more flexible and not chase that goal (inflation just below 2%) at any price», – he said.

Recall that last week the ECB released a forecast for the eurozone economy, which lags behind potential, and noted, that the pace could slow down even more by 2022.

[KostiaFM]

19.12. China exempts a number of American goods from duties

After the United States and China announced the conclusion of the first phase of trade deal, Beijing unveiled a new list of exempted from duties goods from the United States. The exemption from tariffs will enter into force on December 26 and will last a year, until December 26, 2020.

Tariffs will be canceled for six categories of products, including white oil, high density polyethylene and linear low density polyethylene. The total value of imported goods is not specified.

Last Friday, Washington and Beijing announced the approval of the text of the first part of the trade agreement, under which the parties agreed not to introduce new duties on each other. On Sunday, U.S. trade representative Robert Lighthizer said that the signing of the first phase of the transaction will take place in early January 2020.

He also noted that this agreement will lead to an almost twofold increase in US exports to China in the next two years, since it implies an increase in China's purchases of US agricultural, industrial and energy products.

[KostiaFM]

20.12. US Commerce Department maintains estimate of country's GDP growth in Q3 at 2.1%

According to the third and final estimate of the US Commerce Department, real gross domestic product (GDP) increased at a 2.1% rate. The indicator coincided with the forecasts of analysts and the second estimate. According to the first estimate, the growth of the US economy in the reporting period amounted to 1.9%.

In the first quarter of this year, the country's GDP growth in annual terms amounted to 3.1%, in the second – 2%. The indicators for 2018 were as follows: 2.5% growth in the first quarter, in the second – 3.5%, in the third – 2.9%, and in the fourth – 1.1%.

[KostiaFM]

23.12. Gold rises weakly in anticipation of details of the trade agreement

The price of gold is growing slightly on Monday, market participants are waiting for further news from the front of the trade war. The cost of the February gold futures on Comex New York Stock Exchange reached $1.488.95.

On Saturday, US President D. Trump confirmed that a trade agreement with China, which the parties have been negotiating for more than a year, will be signed soon. However, the details of the deal are not specified.

Market participants are concerned about the lack of additional information, as well as the fact that China has protested to the United States regarding the inclusion of items on supporting protesters in Hong Kong in the draft defense budget for 2020.

[KostiaFM]

24.12. Canadian economy shows easing for the first time in 8 months

Canada's economic indicators unexpectedly fell in October amid a sharp decline in manufacturing and retail sales.

According to Statistics Canada data, GDP in October fell by 0.1% compared with the previous month – to 1.975 trillion Canadian dollars ($ 1.5 trillion). This decline became the first in eight months. Analysts had forecast growth of 0.1% after rising 0.1% in September. In annual terms, the Canadian economy grew by 1.2%.

The most negative impact on the country's economy had a decline in manufacturing (by 1.4%) and in retail trade (by 1.1%).

[KostiaFM]

25.12. China says it is in close touch with U.S. on trade deal

US President Donald Trump and President Xi Jinping of China announced that the first phase of a comprehensive trade agreement has already been concluded, and now the necessary documentation is being finalized and translated. Moreover, the heads of two countries plan to hold a ceremony of signing the first stage trade agreement.

Foreign Ministry Spokesperson Geng Shuang also confirmed that the parties are in close contact and they effectively interact in resolving and discussing various issues.

The signing ceremony will take place in early 2020. The representative of the Commerce Ministry of China said that details of the terms of the deal will be made public only after the formal signing of the agreement.

[KostiaFM]

26.12. Oil is on the way to new highs

Oil prices continue their upward movement. Growth is supported by expectations of a Washington and Beijing trade deal, as well as data on a decrease in US inventories.

Futures for Brent crude this morning are trading at $67.40 per barrel. February quotes for WTI crude oil are $61.35 per barrel.

According to the American Petroleum Institute data (API), US commercial oil inventories fell 7.9 million barrels last week. API is a private company that receives information from refinery operators, oil storage facilities and pipelines on a voluntary basis. However, these statistics do not always coincide with official data from the US Department of Energy. This data will be released this week on Friday.

We also note that on Wednesday the market was closed in connection with the celebration of Catholic Christmas. The oil market continues to get support from the optimism about the trade agreement between the US and China. US Treasury Secretary Steven Mnuchin confirmed that an agreement with China will be signed soon.

Analysts note that oil prices are likely to change little over the next year, as OPEC+ actions to reduce production will be balanced by production growth in other countries, and the prospects for demand are still unclear. Experts predict a rise in oil prices in the middle of the year amid rising demand from developing countries and OPEC+ measures.

[KostiaFM]

27.12. Russian authorities are considering the possibility of exit from the OPEC +

The head of the Ministry of Energy of the Russian Federation, Alexander Novak, said that the Russian authorities will soon consider the issue of a possible withdrawal from the OPEC+ agreement.

Despite the effectiveness of the deal to reduce global oil production, A. Novak believes that Russia will need to gradually make a decision to exit in order to maintain market share and enable Russian companies to implement their promising projects.

The minister also noted that the market responds very well to such agreements to reduce production: volatility has decreased, investment in the industry has returned, and current oil prices satisfy both producers and consumers.

At the moment, the agreement provides for a reduction in production by 1.2 million barrels per day from the level of October 2018 until the end of 2019 and by 1.7 million barrels – in the first quarter of 2020.

[KostiaFM]

30.12. Beijing authorities urged to abandon cryptocurrency trading

Several municipalities in Beijing, including the Financial Supervision and Administration Service, the People’s Bank of China Business Administration Division, the Banking and Insurance Regulatory Service, and the Securities Market Regulatory Service, have called on businesses to abandon cryptocurrency trading activities.

The regulatory authorities noted that some cryptocurrency platforms have already seriously violated the rules prohibiting ICOs issued in 2017. Moreover, the institutions called on Chinese companies to impede the promotion of cryptocurrency projects and platforms, as well as to report on all violations of the relevant rules.

It is worth noting that such policy of the Chinese authorities is conducted in parallel with the development of a national cryptocurrency. As you know, the People's Bank of China is preparing to test the electronic payment system in digital currency (DC / EP) in the cities of Shenzhen and Suzhou.

Seven state enterprises were selected as a platform for testing the digital renminbi: four commercial banks and three telecommunications giants (China Mobile, China Telecom and China Unicom). The pilot program will affect the field of transport, education, trade and medical services.

[KostiaFM]

31.12. Experts predict global economic growth in 2020

Analysts positively assess the prospects for the development of the global economy in 2020.

Economists expect the active phase of the US-China trade war to end and consumer spending to remain high, which will contribute to economic growth despite low investment in business.

According to Goldman Sachs experts, the risk of a global recession will decrease and unemployment will drop to the lowest level since the Korean War. In 2020, the global economy will reach 2.25–2.5%, while the unemployment rate will reach 3.25% by the end of the year.

Analysts also expect key Fed rates to remain unchanged. Regulatory officials made it clear that a significant and constant increase in inflation was needed before considering the issue of raising rates.

[KostiaFM]

07.01. Gold rolled back from seven-year highs

On Tuesday, the price of gold in Asia fell back from seven-year highs in the $1,582.59 area after tensions in the Middle East declined slightly. Earlier, the metal demonstrated skyrocketing amid the news of escalating tensions in the US and Iran after the assassination of Iranian General Qassem Suleimani by the US military. Today, gold prices fell to around $1,558.45 per troy ounce.

According to experts, the reduction of geopolitical risks occurred due to the lack of an immediate response from Iran. In addition, some profit taking is observed in the markets.

However, market participants continue to exercise caution in their actions. We believe that the conflict between the United States and Iran is at its starting point, so further measures by Tehran and Washington could significantly aggravate the situation.

[KostiaFM]

08.01. US Senate Profile Committee approves USMCA Trade Agreement

The United States Senate Committee on Finance has approved the U.S.-Mexico-Canada Trade Agreement Implementation Act (USMCA). The document was adopted by a majority vote (25 votes in favor / 3 against).

A further trade agreement process will include a vote in the US Senate and the final signature of President Donald Trump. Previously, the agreement was approved by the House of Representatives.

The revised agreement includes the rules for participants to access the domestic markets of the three countries, tariffs and some labor laws. The new standards are expected to enter into force in June 2020.

Recall that work on revising the provisions of the North American Free Trade Agreement began in 2017. The parties faced many contradictions and conflicts during the negotiations between the USA, Canada and Mexico.

[KostiaFM]

09.01. U.S. weekly jobless claims fall, ranks of unemployed swelling

According to the US Department of Labor, the number of Americans applying for unemployment benefits for the first time fell to the lowest level in 5 weeks. The indicator decreased by 9 thousand – up to 214 thousand. A week earlier, the number of applications was 223 thousand.

Analysts predicted that the number of applications will decrease by only 3 thousand -– up to 220 thousand.

The average number of applications for unemployment benefits over the past 4 weeks (a less volatile indicator) decreased from 233.5 thousand to 224 thousand. The number of people continuing to receive unemployment benefits increased by 75 thousand – to 1.803 million, which was the highest since April 2018.

[KostiaFM]

10.01. U.S. job growth slows in December, unemployment rate steady at 3.5%

According to the Labor Department data, the U.S. economy has shown less job growth outside the agricultural sector (Nonfarm Payrolls), as the jobs market cooled at the end of 2019.

The number of new jobs rose only 145 thousand in December, while analysts had expected an increase of 164 thousand.

The unemployment rate remained stable at 3.5%, as predicted. The average hourly earnings for the month rose 0.1% compared with growth expectations of 0.3%.