News background and trading ideas for 26/11/2018

26 nov 2018

Last week has been poor on the relevant macroeconomic statistics, or some significant events nevertheless it has handed a few surprises. First of all, these are sell-offs in the cryptocurrency market, as well as another oil’s fall on 10%+ (by the way (!) this is the seventh week in the row when the oil ended in the red).

The essential event of the weekend was the summit between EU and Great Britain. Well, leaders of 27 countries, which will remain in EU after the exit of Great Britain, have approved a draft agreement which provides conditions of Brexit. So it can formally declare that the negotiations have ended successfully and now for the UK comes the final step - to push the current version of the treaty in the Parliament. The Parliament is run out of time for consideration and voting (experts name the December 20 as the deadline, but really a vote should take place at the start of December). So a denouement is just around the corner. Recall, we recommend purchases of the pound. According to our estimates, paired with the dollar, its level of undervaluation exceeds 1000 points.

The last day of the week has been quite saturated in terms of outgoing data. However, the Europeans didn’t seem very excited: the German GDP data was very vulnerable, as were the indicators of business activity. And since Germany is the core of the Eurozone economy, there is nothing surprising in the fact that the Eurozone Business Indices are also worse than expected. It is entirely appropriate that the euro was under pressure and suffered losses. Our attitude to the euro is still unchanged - we are looking for points for sales of the single European currency.

The reaction of the Canadian dollar to rather good statistics on Canada turned out to be somewhat strange (consumer inflation and retail sales were higher than expected). The growth of the USDCAD pair can only be explained by the general strengthening of the dollar in the foreign exchange market. Recall, we recommended selling USDCAD and still see no reason to reject this idea. Quite opposite, current prices, especially after great statistics on Canada, seem to us as a great opportunity for more expensive sales. In any case, we note that the stops should be placed above 1.3330, but the profits can be set around the 1.30 or even lower. But it depends, of course, on the planned time being in a position.

Sell-off of the oil on Friday was related to another part of the rumors that Saudi Arabia has produced a record quantity of oil in November. Regarding that, all market’s eyes now are on supply in the oil market, the news turned out into the hands of sellers. Let’s remind, we’ve recommended to sale the oil already for a couple of months, and continue looking for the points for asset’s sales, both as for intraday sales as well as for mid-term sales. We see the potential for a decline of up to $40 for a barrel (WTI crude).

Other our trading ideas are unchanged: mid-term sales of the Russian ruble as well as an intraday purchases of the gold.