Economic data released today did not influence trading as investors stay focused on the incoming FOMC meeting. Moreover, disappointment in sentiment indicators, including Conference Board Index, may partially reflect the US government shutdown, being a one-time event. Volatility in global markets should be low ahead of Powell statement scheduled for Wednesday, however other events also are noteworthy.

First of all, market optimism seems to have increased due to speculations that trade war between the USA and China may calm. On Wednesday and Thursday the Chinese Vice Premier Liu He is to meet with the US Secretary Mnuchin and hints from this meeting will be closely eyed. Earlier, on Wednesday, the U.K. Parliament will vote on amendments to the Brexit deal with the EU.

Interesting situation is observable in the gold market, where the price breached the USD 1300 resistance and approached USD 1310. In our view the recent growth is hard to explain as inflation expectations are falling and risk appetite is strong. That is why, we keep our bid at lower levels, looking for short-term corrective moves.

The XAU/USD broke above the 61.8% Fibo of 2018 fall. It remains above short-term moving averages that are strongly positively aligned. Our trade idea is to buy gold at 1280.00.

Meanwhile the US S&P 500 stays within horizontal trend and in short term should stay between 2610 and 2680 pts, while the German DAX should trade between 11000 and 11400 pts. Stabilization is expected also in Asia, with Hang Seng is trading between 27000 and 27900 pts. Later this week sentiment will depend of FOMC meeting and political developments. Particularly positive for stocks would be the combination of dovish FOMC and improvement in trade relations between the USA and China.

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