News background and trading ideas for 19/11/2018

19 нояб. 2018 г.

As traditionally we begin the first review of the new week with an analysis of the last week. All the key events of the past week without any doubts were related to the UK and Brexit. On Thursday, we witnessed the most powerful fall of the British currency amid the news that the British Government was leaving several ministers in connection with the disagreement with the current version of the treaty between the EU and the UK. Markets literally fixated on the pound’s issues, ignoring the obvious positive: the appearance of a “draft” arrangement between the EU and the UK (only a week ago they only dreamed about it), as well as the Government’s approval of this “draft” - that is, from the point of view of formal procedures, Great Britain has passed most of the way of the exit from the EU within one week.

Such development of events completely confirms our core idea - markets wrongly assess the probability of conclusion the deal and consequently the vast underestimation of the pound. So we continue to recommend purchases of the pound and perceive the current prices as a gift.

Another high-profile event of the past week was the drop in oil, which occurred amid the news about a new cut of production by OPEC+ members (figures about 1 million barrels per day were voiced). A fall amid the fundamental positive is a very bad signal for oil. And although at the end of the week has managed to slow down the fall and even draw a couple of white candles, we consider that the oil should continue to be sold. Moreover, oil reserves in the United States are growing, as well as the number of drilling rigs and, as a result, oil production in the United States.

The upcoming week in terms of macroeconomic statistics is quite calm. Unless the important block of statistics on Canada on Friday. But what to do with the Canadian dollar, we will talk on the eve of the data. Otherwise, we continue to observe the situation around Brexit and use pound volatility for active intraday trading. Recall, in addition to the medium-term long positions on the pound, we recommend conducting active trading within the day, buying on descents and closing purchases, when the plus reaches 100-150 points.

Do not either forget selling the Russian ruble and keep looking for the points for intraday gold purchases.