An unnoticeable correction on Wall Street

The stock exchange on Wall Street made a correction yesterday. However, its scope was cosmetic and there was no breakthrough in the charts of the main indices. The rate of the main currency pair reached a local peak around 1,0865, but in the short term the prices remain in consolidation.

Today we will get to know the ISM report of the service sector in the USA. Friday's manufacturing index was disappointing. Greater variability may occur around 16. We will receive it from Europe earlier final PMIs, which, however, should not arouse great emotions. Thursday EBC will decide on interest rates. Today, China's Prime Minister presented his first government work report to open the annual meeting of the National People's Congress. Today, Bitcoin has reached historic highs.

US primaries

In the United States, it's "Super Tuesday", which means that 16 states will hold Republican and Democratic primaries. The US Supreme Court ruled that Donald Trump may appear on the presidential ballot this year. The unanimous decision overturned a Colorado Supreme Court ruling barring the former president from running again due to his efforts to overturn his 2020 election loss. The ruling came ahead of today's primary elections, in which Trump hopes to win decisively.

Yesterday, Raphael Bostic spoke about monetary policy and said that he expects that after the first interest rate cut by the Fed, which the central bank plans for the third quarter, there will be a pause to assess how the policy change affects the economy. Bostic said he was afraid that companies have too much enthusiasm and may unleash new demand after a rate cut, which will increase price pressure. He also added that he wants to reduce the size of the Fed's balance sheet at the current rate for some time.

Ambitious GDP growth target in China

The annual meeting of the National People's Congress of China began today. Premier Li Qiang announced the growth target CBA at the level of approximately 5% for this year, the same as last year. The Middle Kingdom is struggling with many adversities (real estate crisis), so the set goal is really very ambitious. The government will need to implement more effectively stimulus checks to drive the economy. The issuance of long-term special treasury bonds is planned this year. This is a clear signal that Beijing plans to use additional fiscal resources to support the economy, with the central government taking on the financial burden of local governments.

The official general government fiscal deficit target was set at 3%. GDP, which means a decrease from 3,8 percent. last year. The market may have been surprised by the Prime Minister's decision not to hold a press briefing after the week's meeting. They will also not be present during the rest of his five-year term.

Waiting for important data

Yesterday's macro calendar was poor. Data from the US was missing. From Europe, we only learned about the Sentix index, which, let's face it, is a second- or even third-rate publication. Investor attention today will be focused on the ISM indicator for services, which is, after all, more important than industry. A slight decline in the main indicator is expected from 53,4 to 53 points. We would certainly see a strong market reaction in the event of worse data, especially when the ISM falls below the threshold level of 50 points.

Investors will also look at and evaluate sub-indices of employment, prices paid and business activity. Only tomorrow will data from the American labor market begin to arrive (JOLTS, ADP – Wednesday, NFP – Friday). Let's not forget Powell's speech before the House Financial Services Committee and the Banking Committee (Wednesday-Thursday). The question session may be particularly interesting.

Source: OANDA TMS Brokers