News background and trading ideas for 02/11/2018

2 lis 2018

Yesterday's dollar selloffs have more political implication than an economic one. The fact is that mid-term elections to Congress will already take place on November 6th. Since the probability of forming a polar parliament is high, the dollar was under pressure. The issue of a “split” parliament is that this will drastically reduce the chances for the implementation of new economic incentives from the Trump administration. Particularly, his latest idea is to reduce tax pressure on medium-sized companies. Nevertheless, already today clouds over the American currency can be replaced by the sun, thrown by the NFP. See our separate review to get more details about our expectations about today's labor market statistics.

Yesterday's highlight event without any doubt was the meeting of the Bank of England. And although it did not bring any special surprises, the pound continued a steady growth. This was related both to statements by the head of the Bank of England Mark Karni (who noted that if necessary the Central Bank is ready for monetary policy tightening, and as for Brexit, the core scenario of the Bank of England is to conclude an agreement), and with a gradual change in expectations of markets for the outcome of negotiations between the EU and the UK. Markets increasingly believe that the deal will be done. Particularly, yesterday in The Time has published an article, announcing that the parties had reached a preliminary agreement on all aspects of the future partnership in the service sector, which would allow London to avoid severe shocks in the banking sector. So we continue to buy a pound.

Gold, either, was growing yesterday justifying and practicing the advances that we gave it in our reviews. Recall, after the breakdown of 1210, we recommend buying gold.

Do not also forget about the sails of oil. Especially in the light of last statements by the USA that they are ready to turn a blind eye to the supply of Iranian oil to a number of countries. Such announcement largely reduce the effect of sanctions for the oil market. Therefore, it has an extremely negative impact on oil price quotes.

Given that oil prices have already dropped by more than 15% over the past month, we consider that the Russian ruble has accumulated significant potential for the decline and just waiting for a reason to start falling. The most obvious reason is the new sanctions from the US, but even if they do not follow, sales of the Russian ruble with such oil seem inevitable. So we remind our readers of another very promising idea, in our opinion, is the mid-term sales of the Russian ruble.