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The situation in global markets remains negative. Stock markets continue to fall and demand for commodity and commodity assets is also declining. At the same time, protective assets are in demand, which include government bonds of economically developed countries, gold, and safe haven currencies.
The reasons for this tension are undoubtedly the consequences of the US-Chinese and American-European trade wars, paired with the Brexit problem, which negatively affect business and production activity in the United States, China and Europe.
On the other hand, the US economic statistics were published on Tuesday and Wednesday, and we are referring to the ISM manufacturing sector activity index (PMI), which fell to the level of 47.8 points, and the ADP employment figures that was presented on Wednesday, which, in turn, showed a decrease in the number of new jobs in September to 135,000 against a forecast of 140,000 and the previous August value of 157,000, which was also revised downward.
The market reacted to this data by continuing the fall in demand for risky assets. Shares of companies show a significant drop in quotes not only in the US stock market, but in other significant trading floors. Thus, we believe that these dynamics is associated with an increase in expectations that the American economy is slowly but surely slipping into a recession, as we have repeatedly pointed out earlier.
Another negativity was the news about Washington's decision to introduce new increased duties on imports of goods from Europe. Starting on October 18, tariffs on aircraft imports will be raised by 10%, as well as industrial and agricultural products by 25%. States have achieved the introduction of new trade duties at the WTO.
Observing everything that is happening, we can confidently say that if the Fed does not suddenly announce large-scale measures to support the national economy in the near foreseeable future, the demand for protective assets will remain. Therefore, we believe that short-term transactions aimed at buying gold and safe haven currencies - the Japanese yen and the Swiss franc - are interesting.
Forecast of the day:
Gold on the spot forms a "descending flag", and inside which, it recovers after reaching a local minimum of 1461.00. Today, it can be corrected to 1491.60. If the level persits, we consider it possible to buy gold with a probable target of 1523.00 again. We also consider it possible to buy after breaking through the level of 1505.50.
The USD/JPY pair, after reaching our target 107.00, is trading above it. We believe that the pair may partially roll back up to 107.40. If this level persists, we expect a price reversal and continuation of its decline, first to 107.00, and then to 106.60. We also believe that it is possible to sell the pair after it falls below the level of 107.00.
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