Market Overview

The uncertainty about the interest rate hike by the Fed this year remained. Yesterday's minutes of the latest Fed's meeting did not produce any clarity on the Fed's monetary policy. The Fed said that it wanted to have more time to see if the slowdown in the global economy will have a negative effect on the U.S. economy. FOMC members noted that the U.S. labour market continued to improve, while the inflation remained at low levels.

Fed officials continued to say this week that the interest rate hike by the Fed this year is still possible.

Despite the strengthening of the U.S. labour market, the U.S. growth seems to slow down. According to the ISM data this week, the growth in the services sector declined in September.

Market participants are awaiting the release of the U.S. inflation and industrial production data next week. If the data is weaker than expected, it will add to speculation that the Fed will not start raising its interest rates this year.

Stock markets were driven by higher oil prices this week. Oil prices rose on expectations that the global oil output will decline and the global oil demand will rise. Expectations were supported by comments by OPEC Secretary-General Abdalla Salem el-Badri. He said on Tuesday that oil prices will rebound due to lower oil investments. el-Badri expects global oil investments to drop by 22.4% this year.

It is likely that stock markets remain volatile on oil prices next week.

The foreign exchange market is also likely to remain volatile as market participants will look for further clues for the Fed's monetary policy.

It is likely that the currency pair EURUSD will test the high of September 18 at $1.1459, maybe even the level of $1.1500, if the U.S. economic data will negative and there will be no negative news from the Eurozone.

If the U.S. economic data is positive and in case of the negative news from the Eurozone, the currency pair EURUSD may test the level of $1.1200.