Corrective moves started in US markets

Last week the US stock indices edged down after 3 weeks of constant growth. US dollar fell too. Negative trend started on Monday on the absence of significant economic data. On Tuesday, the positive data came out, which had little impact on the markets. The GDP for Q3 2016 advanced 3.2% in the 2nd reading far above the forecast, compared to +2.9% in the 1st reading. The Atlanta Fed expects positive trends in the US economy to continue and GDP to rise +3.6% in Q4 2016. On Tuesday, consumer confidence index for November came out hitting a record high of 107.1 points since the pre-crisis level in July 2007. Despite such positive movement, the US stock advance was minor, while the US dollar edged lower.

On Wednesday, the ADP independent agency released the US labor market data, which pushed the US dollar index up. The US dollar strengthened 9% against Japanese yen to hit a record high since August 1995.

The US dollar index fell on Thursday together with the stocks. Markets shrugged off the positive ISM and Markit Manufacturing PMIs. Negative trend continued on Friday. Non-farm Payrolls increased in the US, but the October and September readings were revised down. Besides, the US labor force participation fell to 62.7% which was another negative. Moreover, higher political risks in Europe on the Constitutional referendum in Italy also weighed on the US markets. Referendum was held on Sunday, December 4. Majority of Italians voted “no” which pushed stocks prices up on Monday. The US dollar index edged down while euro strengthened.

Few significant economic data will come out this week. Trading balance, factory orders for October, as well as durable goods orders in the 2nd reading will come out on Tuesday. The Michigan University Consumer Sentiment index and wholesale inventories will come out on Friday. In the euro-zone, the next ECB meeting will be held on Thursday.