Thread: ForexMart's Forex News

British economy: growth after two months of stagnation

According to operational data from the Office for National Statistics, published on Friday, the British economy grew by 0.2% in August compared with the previous month.

After stagnating in June and July, following modest but steady growth at the beginning of the year, the UK emerged from a mild recession earlier this year.

The release of economic growth data coincided with the upcoming autumn budget, which Treasury Secretary Rachel Reeves will present at the end of the month. The budget, expected by many, will include tax increases and spending cuts aimed at eliminating the estimated deficit in public finances, estimated at 22 billion pounds ($29 billion). However, the Conservative Party, which ruled the country before the snap elections, denies there is a deficit.

Reeves also did not rule out the possibility of revising the rules on the country's debt obligations in order to attract more investment.

The government claims that these measures are part of its «national renewal» program aimed at restoring optimism in society after warnings about the state of the economy.
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Bitcoin at $70,000: market expectations against the background of elections

On Monday, the price of bitcoin reached a three-month high, exceeding $69,500. This growth is associated with increased speculation about the likely victory of Donald Trump in the upcoming elections.

Recent polls and forecast markets show an increase in Trump's chances of winning, which causes increased interest in bitcoin. Trump has repeatedly expressed support for cryptocurrencies, promising to build «the future of bitcoin in America,» even accepting donations in cryptocurrencies during his campaign.

If he wins, traders expect more loyal regulation of cryptocurrencies in the United States, which can be a powerful incentive for the growth of the bitcoin exchange rate.

Experts also note that breaking the $70,000 mark will be a key bullish signal for bitcoin.

At the same time, there are only two weeks left before the vote, which creates instability in the markets. Investors in search of «safe havens» prefer gold and the dollar, which reached a record high on Monday. Despite this, the latest capital movement data shows that institutional investors resumed buying cryptocurrencies last week.
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The euro is weakening, the dollar is rising amid the upcoming elections in the United States

The dollar index continues to grow, reaching two-month highs and approaching 104.0.

This growth is due to investors' expectations that the US Federal Reserve will maintain a cautious position on lowering interest rates. Recent economic data show the stability of the American economy, and inflation is decreasing smoothly.

At the same time, the euro continues to weaken after the recent decision of the European Central Bank to cut key interest rates. The situation is aggravated by weak inflation data in Germany, indicating a slowdown in economic growth in the eurozone. The Chinese yuan also weakened against the dollar, returning to 1.5-month highs at 7,125.

Against the background of the upcoming US elections, investors predict a different dollar exchange rate depending on the results of the US elections. Historically, the Republican presidency is associated first with a strong and then a weakening dollar, while Democratic presidents, on the contrary, usually start with a weak dollar, which then strengthens.

In the near future, attention will be focused on the publication of preliminary business activity indices (PMI) for the eurozone, which will provide updated information on economic indicators in October.
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Investors are leaving thematic ETFs en masse: AI, video games and other topics are losing popularity

There is a change of favorites in the global investment market. Investors are increasingly moving from exchange-traded funds (ETFs) specializing in certain topics to traditional ETFs linked to stock indexes.

Analyst data indicate that the outflow of funds from thematic ETFs has continued for the third year in a row. This year, $5.8 billion has been withdrawn so far, which already exceeds the outflow for the whole of 2023 ($4.8 billion).

The growth of stock indexes, which are near record highs, is one of the reasons for this phenomenon. The five largest ETFs tracking the S&P 500 and Nasdaq 100 indices have received inflows of $170 billion this year.

Experts believe that investors may prefer the stability and broad diversification offered by index ETFs. They also point out that thematic investing itself involves risks. Choosing the right topic, the stocks that will benefit most from this topic, and accurately determining the time of purchase of the fund — all this requires high qualifications and experience.

This trend may indicate that investors are becoming more conservative in their investments. But it's worth noting that thematic ETFs can return to favor if certain topics, such as AI or the metaverse, show strong growth.
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Oil ends the week with growth amid geopolitical uncertainty

The oil market ended the week with growth, recovering some of the losses on Monday and Tuesday. Brent crude futures rose 0.77% to $75.15 per barrel, while U.S. WTI rose 0.85% to $70.79, despite continued uncertainty in the Middle East.

Traders are closely monitoring the development of the situation in the Gaza Strip, where ceasefire negotiations are expected to resume. Tensions in the Middle East caused by Iran's missile attacks and the expected Israeli reaction are putting pressure on oil prices. Some analysts predict that possible strikes on Iran's oil infrastructure could lead to higher prices.

At the same time, expectations regarding China's stimulus policy have a restraining effect on the market. Despite hopes for an increase in oil demand, experts do not expect that Chinese measures will have a significant impact on prices.

Goldman Sachs confirmed its forecast for oil prices at $70-85 per barrel for Brent in 2025, citing that the impact of Chinese incentives will be modest compared to other factors such as the supply of oil from the Middle East.
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Oil has fallen in price after Israeli strikes on Iran

On Monday, oil prices fell by more than 5% after Israel's retaliatory actions against Iran did not affect key oil and nuclear facilities. Trading on the oil market began with a sharp decline, and Brent futures fell 5.5% to $71.05 per barrel. WTI contracts also fell by almost 5.8%, trading around $67.20.

Last week, oil prices showed significant volatility, increasing by 4%. The growth was driven by expectations of a wide range of Israeli responses to the Iranian missile attack on October 1.

On Saturday, the Israeli Air Force launched three waves of strikes against military installations near Tehran and in western Iran. However, the absence of strikes on oil and nuclear facilities has led to a decrease in geopolitical tensions and, as a result, to a decrease in the «risk premium» embedded in oil prices.

Analysts note that the market will now focus on negotiations on a cease-fire between Israel and the Hamas group. Some financial institutions, such as Citi, are already revising their oil price forecasts, lowering target levels due to reduced geopolitical risk.
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The United States will limit investments in Chinese technology

In an effort to protect its technological interests and contain China's military potential, President Biden's administration took a decisive step. On October 28, the U.S. Treasury Department unveiled new rules that significantly limit investments and technical assistance from American companies in the development of key sectors of the Chinese economy.

The focus turned to technologies that are important for future military, cybersecurity and intelligence operations: semiconductors and microelectronics, quantum computing and artificial intelligence.

The introduction of these rules, which take effect on January 2, is part of a broader U.S. strategy to limit China's access to technologies that can be used to pose a threat to national security.

The Biden administration stresses that the purpose of these measures is to prevent China from receiving «intangible benefits» from US financial support, including improving its reputation, market access and attracting highly qualified personnel.
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Gold hits historical high: $2,800 per ounce

The price of gold has reached an unprecedented level — for the first time in history it exceeded $2,800 per ounce. The current price of the precious metal is $2794.

Such a rapid price increase exceeding 30% this year is attributed to several factors. First, central banks are actively buying gold, making it more in demand on the market. Secondly, during the period of geopolitical instability caused by conflicts in the Middle East and Ukraine, investors are increasingly turning to gold as a «safe haven.»

Also, the uncertainty caused by the upcoming presidential elections in the United States supports interest in gold as a reserve asset. Analysts are recording a strengthening market position, expecting not only a reduction in Fed rates, but also broader market and geopolitical uncertainty.

Global demand for gold reached a record high in the third quarter, exceeding $100 billion. According to the World Gold Council, sales volumes increased to 1,313 tons, due to active investment flows, including from wealthy individuals from Western countries.
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The European economy grew in the third quarter

In the third quarter, the eurozone economy showed unexpectedly strong growth, reaching 0.4%. France and Spain became the key drivers of this growth, and Germany, which was previously under threat of recession, increased GDP by 0.2%. In Italy, the production level remained at the level of the previous quarter.

Inflation in Spain accelerated slightly to 1.8%, remaining within the ECB's target range of 2%. Consumer prices in Germany rose by 2.4% y/y in October.

Germany still faces challenges such as loss of competitiveness due to high energy costs and a shortage of qualified personnel. Nevertheless, growth in the third quarter was supported by consumer and government spending.

The growth of the French economy is associated with the Olympic Games, as well as with increased government spending, despite the difficult financial situation. Although the increase in French GDP has brought some relief to the government, weak investment figures and a slowdown in consumer spending continue to negatively affect the budget.

Austria also showed growth of 0.3%, while Portugal and Lithuania have seen an acceleration in GDP growth.
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Oil soared amid Iran's threats

Tensions in the Middle East have brought the market's attention back to the escalation of hostilities, which has led to a sharp rise in oil prices. Reports of a possible Iranian attack on Israel from Iraq in the coming days forced investors to pay attention to geopolitical risks.

On Friday, Brent and WTI recorded significant growth, exceeding $74.80 and $70.2, respectively. At the beginning of the week, prices fell after a limited Israeli attack in response to rocket fire from Iran, but experts warned that the market «relaxed too quickly.»

Despite some encouraging signals, including the American proposal for a cease-fire in Lebanon and Israel's stated willingness to respond decisively, market participants continue to anxiously observe the growing tensions in the region.

The oil market will be under the close attention of investors in the near future, as a number of key events may significantly affect prices. Next week, the United States will hold presidential elections and a meeting of the highest legislative body in China. Also, the decision of OPEC+ to gradually resume production from December will have significant weight for the price trend.
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