The market is no longer focused on the election issue in the USA. Thus, risk aversion activities are fading away as well. Last week, second-tier currencies, including Indian rupee, South African rand, Turkish lira and Chilean peso enjoyed good demand. At present, the markets include a possible increase in the interest rate in South Africa that can take place this month driven by increasing inflation. As a result, the rand has got a driver for an upturn. Meanwhile, traders are careful about the observed upturn as they are not sure in the fundamentals. The markets reportedly plan to see balanced conditions once Donald Trump agrees upon monetary and fiscal softening. As the market expert noted, the event-trigger risks are likely to be low in 2019, and the global economic slowdown is already in the outlook. Stock prices may keep rising, while the greenback may move downwards.
At the same time, the US Federal Reserve will most likely leave the interest rate unchanged after a this-week meeting. As a result, the rate will still be 2.00-2.25%, which in tandem with no scheduled press conference today will result in a moderate response of the markets. Meantime in Europe, the Europea Commission is about to announce the 2019 economic outlook which will cover the budget deficit in Italy to exceed Rome's assessment. Switzerland reduced the unemployment rate to 2.4%, and if Donald Trump switches to softer trade policy, Switzerland can record faster economic upturn and the Central Bank may consider revision of the interest rate before expectations.