Get ready for Fed decision, Brexit & bullish oil market

2019년 10월 28일

Brexit was accustomed to being the main news generator last week, at least for the pound pairs.

Parliament refused to vote for the deal until it made changes to British law, which meant the need to request a postponement. In our opinion, this is just a way to publicly humiliate Johnson, who has repeatedly said that October 31 will be the end date. As a result, Johnson sent a letter to the EU asking for a postponement, but “forgot” to sign it.

In the EU, instead of a postponement, decided to wait until the British agreed on something. It is all about the special election. On Monday, this issue will be put to a vote in Parliament.

In general, the week will be hot for the pound from its very beginning. Well, the date of October 31 is Thursday of the current week. So get ready for the sharp spike in pound volatility. Generally, we remain bulls on the pound - the issue of leaving without a deal is practically removed from the agenda, so this is a sign for buying the pound. But its decrease by several hundred points against the background of negative news from Parliament / Government of Great Britain or the EU is quite possible. So do not forget to put stops and monitor the news background.

The current week for all other participants in financial markets (except the British) will be interesting first of all by announcing the Fed's decision on the interest rate on Wednesday. The current consensus - lowering the interest rate, and then will put the process of changing rates to a pause at least until the end of the year. We’ll talk more about this on Wednesday before the event.

Unexpected for the markets Central Bank of Russia decreased the interest rate by 0.5%. Given that the ruble came close to our settlement point No. 1 for the sale of the ruble, we recommend opening long positions in the USDRUB from current prices in the region of 63.60 with a minimum target in the region of 65.20. The second round of purchasing starts at about 62.60.

And a few words about the oil market. Formally, our recommendation to buy in the region of 51.20 with goals 56 last week worked out completely. Knowing how events are developing, there is a chance to raise the growth target - oil may well reach 60 (WTI brand).

According to Baker Hughes, the number of oil rigs in the United States fell by 17 to 696 units. Thus, their number has fallen to its lowest level over the last 2.5 years. Recall, last week, US oil inventories decreased by 1.7 million barrels. So this week we are looking for points for oil purchases. The goal until the end of the week is 60. But at the same time, do not forget to set up small stops.