The USD is declining in the currency market, especially against commodity currencies, while
US stock indices are reaching new records. Traders prefer to close long positions on the USD due to the rise in the American currency within a few weeks after presidential election in the United States.
The index WSJ, which shows positions of the USD against a basket of 16 other major currencies, has dropped by 0.17% to 90.72.
Probability of the rate hike at the next meeting of the US Fed on 13-14 December is about 92%. However, the rate hike has already been incorporated in the price of the USD and now investors will wait for indications the Fed’s other plans for future.
On Wednesday US stock indexes S&P500 and DJIA have reached new highs. Although the USD is declining in the currency market, American stock indices have been going up after the election of Donald Trump as President of the United States.
Since 9 November up to date, DJIA has grown by 5.5%, S&P500 - by 4.6%. DJIA is at the level of 19530 and S&P500 is near 2240 points.
These are the new highs for the indexes. Investors have been actively buying the shares and tried to get rid of the bonds, hoping that Donald Trump’s policy will accelerate economic growth. The most popular are the shares of the financial and industrial companies.
Economists believe that the rise in the US stock market will continue in 2017 due to continuing GDP growth, caused by the improvements in the labor market and higher corporate earnings.
Investors expect that restrictions will be lifted and inflation rate will increase. The US economy is in a good state; it is expected that public spending next year will increase, in accordance with the economic policy suggested by Donald Trump, which will be beneficial for the county in the short term. Interest rates are likely to be raised in December and probably next year, which will continue to stimulate economic growth and the rise in the shares of banks and the financial companies.
Today, investors ' attention will be focused on the interest rate of the ECB, which will be published at 15:45 (GMT+3). The ECB may announce changes to QE program, which is due to complete in March 2017. At 16:30 - press conference of the ECB will start and a speech of the head of the ECB, Mario Draghi. It is expected that volatility in all financial markets will increase. Before the announcement of the news, investors will probably prefer “wait and see” attitude today.