The current week turned out to be quite nerve-wracking for the current markets. First, the situation around the cybersecurity of the Chinese company Didi forced investors to expect an increase in tension in the stock markets, then we have the publication of the Fed's minutes, which exaggerated again the topic of a possible change in the course of monetary policy, and then finally, the growth of Treasury yields. All this caused an increase in volatility in the stock markets and an increased demand in the US dollar, yen, and franc as safe-haven currencies.

If the situation around Didi made the markets surge, then the strengthening of purchases of government bonds, which caused a strong drop in yields – 10-year yields declined to the values of February this year, indicates that investors began to worry about the sustainability of economic growth in Europe and the United States. Thus, the data on the number of applications for unemployment benefits published on Thursday showed again the steady reluctance of Americans to go to work.

Based on the presented data, the number of applications for unemployment benefits increased to 373,000 against the forecast of 350,000 and an upward revision to 371,000 a week earlier. This picture indicates that most low-skilled labor force prefers to sit on welfare in conditions of the risk of contracting COVID-19 that has not disappeared anywhere.

Meanwhile, the futures for European indices are confidently trading in the positive zone before the opening of the European trading session today. It appears that the markets are starting to calm down after receiving a clear monetary signal from the European regulator. On Thursday, the ECB announced a revised strategy for the inflation target, deciding to set it at 2% rather than keeping it near or slightly below it, as it was before.

In view of this, the Euro currency somewhat recovered in pair with the US dollar, but the yen and the franc noticeably pulled back against the same dollar on the wave of a slight decline in the market's tension.

It is likely that the markets will make an upward correction today after the sell-off in the stock markets and the sharp increase in the yield of the US Treasuries. Earlier, the yield on the benchmark of 10-year Treasuries is rising by 3.73%, namely to 1.336%, after testing the local low of 1.250%.

Forecast of the day:

The USD/JPY pair found support at 1.0960 and is pulling back up on a wave of declining market tensions. If it holds above the level of 110.00, it will further rise to 110.50.

The GBP/USD pair is under slight pressure amid the publication of weak data on manufacturing output, which declined by 0.1% instead of the expected growth of 1.0%. It is likely that these and other unimpressive values for the British economy will put pressure on the rate of the pound. If the pair declines below the level of 1.3750, it will further fall to 1.3670.