Worst record of pound, Fed, dollar growth & drop in price of oil

2019년 5월 23일

Escalation of a trade war has led not only to concerns expansion about global economic growth, but also to a fall in the rates of developing countries’ currencies. Since quotation mainly goes against the dollar, it has become an unwitting beneficiary because of this. The correlation between the dynamics of the dollar and the currencies of developing countries reached a maximum value. So the dollar reigned on its throne again. Given the current US attack on China’s technology sector (just yesterday, Huawei also received 5 more Chinese technology companies from the US Government), analysts at Nordea Investment Funds are expecting the dollar to strengthen further in the foreign exchange market, especially against the currencies of developing countries. However, our position goes contrary to the above. We believe that the dollar climbed too high, and will continue to look for points for its intraday and medium-term sales.

The pound, however, is continuing to experience serious difficulties. Against the euro , the dollar is experiencing the longest series of falls in history. May confidently goes to her fourth defeat in an attempt to approve a contract test in Parliament. According to current information, the date of voting is scheduled for June 3. But the pressure on May is increasing also many people are no longer sure that she will generally hold out at the helm before the voting, let alone after its results.

Despite a more than obvious fundamental negative, it seems like current prices are already interesting enough to begin the first round of medium-term buying. This is a long game, so you need to be prepared to endure several hundred accumulated losses and periodically average position. But in the end, of course, in our opinion, the transaction should gild or, at least, significantly increase the financial result.

The motivation for buying is still the same – “rigid” Brexit, that markets are being discounted for, is an extremely unlikely option, which means that the markets got caught up in selling pounds and went below its fair value, especially in the case of the most gate-breaking outcomes of Brexit: the parties either agree, or a repeated referendum will generally remove this issue from the agenda.

The minutes of the last FOMC Fed meeting were published yesterday. Representatives of the Central Bank announced that their "patient" approach will remain relevant for some time. That is, the pause is delayed.

As for other news and macroeconomic statistics, inflation in the UK is slightly lower than expected, but markets are not interesting at, for now, so no conclusions can be made about this. Retail sales in Canada came out better than expected and only strengthened our desire to look for points for buying the Canadian dollar.

About the oil , perfectly fulfilled our sales recommendations yesterday. The formal reason for the start of sales of steel data from the US Department of Energy on oil reserves in the US, which increased by 4.74 million barrels over the week (the markets were preparing for reduction by 1.7 million barrels). Recall, we recommend medium- term and intraday sales of oil .

Thursday promises to be quite a busy day in terms of macroeconomic statistics. First of all, we pay attention to the indicators of business activity in Europe and the USA, as well as the state of the real estate market in the USA.

Our trading positions today are as follows: we are looking for points for buying of the euro against the US dollar , sales of oil and the Russian ruble , as well as buying of gold and the Japanese yen .