The market waits for spring: at first, we sell, and then we think

Berkshire Hathaway Inc fund of Warren Buffett holds not invested about $85 billion

Investors didn't receive confirmation on the weakening of regulation, the aggressive fiscal and tax measures promised the USA, and therefore displace the positions opened on the Tramp speculation. The raw markets are nervous because of danger of failure of the settled commercial connections and failures of the fulfillment of promises too.

The week was extremely illogical: the dollar was sold against the background of strong, almost faultless, data of the USA and hawk rhetoric of the head of the Federal Reserve Yellen. At first, speculators believed the next intentions of the president to contain the growth of dollar, and then also quickly cooled down and won back the enthusiasm in the opposite direction. Trump declared at a press conference that he «inherited a mess», but his «administration works as well debugged machine» and promised the reviewed order on immigration on Wednesday.

The growth of inflation in the USA and increase the probability of toughening of rate policy nowadays disturb investors less than the political tension connected with the new American administration, but, despite postelection threats, a serious trade war, even with China, isn't expected. It is clear − Asian economies are leaders in consumption of fossil fuel, and the USA now believes on export. We wait for the return of the markets to optimism not earlier than February 28.

There was an event, rather sign for the financial market, last week: resignation was declared by one of seven managing directors of FRS Daniel Tarullo, the adherent of tough control of the banking sector. The unique financier leaves because of Trump: he considers that the new president destroys the system of control of financial adventurism created after the crisis of 2007-2008. Trump is going to repeal Dodd-Frank's law unitarily regulating the banking sector in the investment sphere and constraining exchange manipulations a lot of years. The decree with the requirement to heads of regulating boards along with the head of the U.S. Treasury within 120 days provide suggestions on deregulation of the financial sector, is already signed last Friday. The market of difficult derivatives and another «big fat nothing» stands the following in a queue on reforming. Not for nothing, the Berkshire Hathaway Inc fund of Warren Buffett holds not invested about $85 billion - the world investor understands that when money of retail investors becomes an object of gamblings, the Wall Street is waited by fat commission charges and bonuses, and, therefore, he waits.

The semi-annual report of the head of the Federal Reserve passed quietly in the Congress of the USA. The Yellen`s opening statement was hawkish and exceeded market expectations. Janet repeated that FRS waits for a situation in the economy which will guarantee an only gradual increase in rates and left from the answer to a direct question of time. The Federal Reserve is ready to increase at a rate in the first half of 2017, but the time of increase depends completely on the prospects of the start of fiscal incentives and market reaction to the announcement of Trump`s tax reform. Increase in a rate at a meeting on March 15 will be accepted based on a tendency in the financial markets and market expectations. The rhetoric of FRS at a March meeting will be hawkish and to promote the growth of dollar.

The EU doesn't want to listen to insignificant talks around financial problems of Greece any more and urges to move from words to deeds, but the agreement on return of inspectors to Athens is the maximum which can be reached following the results of a meeting of the Eurogroup on Monday. In July Athens should remember about payment of nearly 7 billion according to the undertaken obligations and if creditors delay with discussions, then there will be simply nothing to pay for bills. Greece won't receive money if it doesn't unblock the third aid package of the international creditors with a total amount of €86 billion. The next estimation of the reforms program is necessary, which shall be given by creditors for this purpose, but all of them in doubts. In the case of a favorable result, Greece will be able to finish the aid program and to return to the markets in the summer of 2018.

Analysts consider that because of productivity and demography the economy of Great Britain will be able to overcome difficulties of Brexit and to become the most fast-growing economy in Europe within the next 10 years. The growth of the economy in 2018 will be slowed down to 1,3%, but after that will come to the level of 2% and above. It means that growth of the British economy will exceed indicators of Germany, France, Italy or Spain by 2027. The truth, for now, European Commission doesn't promise that within the next 24 months it will be able to create the new relations between Great Britain and the EU because of the overestimated May's requirements about the almost open entry (whenever possible) on the single market of Europe. So these optimistical forecasts not especially please yet.

There is no important data expected across Asia forthcoming week, but large-scale injections of liquidity of the Central Bank by China have specified concerns of the government of possible fall of the stock market so we listen carefully to any information. Sales in the housing market will become important data of the USA, on the Eurozone, it is necessary to track PMI. Despite Draghi's participation at a meeting of the Eurogroup on Monday and the Ministries of Finance of the EU on Tuesday, the calm on the European Central Bank is planned: usually, notes of the head of the ECB at such meetings aren't cover with the press.

On Monday in America holiday, but Europe works in full, therefore, we wait for correction of week levels. There is no strong statistics current week, but many people will tell, we listen carefully and we watch the press. If again actively push a subject with Trump and his claims to dollar force, it is possible to continue purchases euro.

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Author: Lachlan Patel,
ForexChief Currency strategist