The dollar on Friday, Brexit and the Central Bank of the RF

25 мар. 2019 г.

The dollar unexpectedly “decided” to demonstrate the maximum values in a couple of weeks. Among the main victims was the euro. One of the reasons for the sharp decline in EURUSD was the extremely weak data on business activity in the manufacturing sector in Germany.

The PMI index in the manufacturing industry in March fell to its lowest level since 2012, a mark of 44.7 points (the forecast was 48). In addition to the fact that the data came out much worse than the forecast, the problem is that the index values below the 50 indicates a slowdown in business activity. Thus, the largest economy of the Eurozone is confidently slowing down, which cannot but scare both euro buyers and investors in the world.

Paired with the pound, as well as the Japanese yen dollar on Friday failed to grow. That means that the dollar is not as strong and invulnerable as it might seem on Thursday and Friday. Recall that last week the Fed reported that it is not planning to raise rates in 2019. This is a bearish signal for dollar. So, despite the sharp strengthening of the dollar in the last two trading sessions, we continue to look for points for its sales.

Returning to the pound “topic”. This week can be another defining future of the British currency. Jeremy Corbyn the leader of the Labor Party said that on Wednesday, British parliamentarians could vote on Brexit’s plans, which would be an alternative to Theresa May’s deal. Recall that the EU gave May two weeks to take a vote on the deal. We continue to follow what is happening around Brexit. Recall our position - buy pounds on the descents.

The growth of the dollar has hit on oil quotes. Even the data from Baker Hughes, which showed that the number of oil rigs in the United States again declined did not help. This time is very significant - by 9 units (up to 824). In general, we do not see serious reasons for sales in the oil market yet, therefore we continue to recommend looking for points for asset purchases. We also recommend buying gold.

Another important event on Friday was the announcement of the Central Bank of Russia meeting results. The rate was left unchanged and the Russian ruble was subjected to powerful sales. Given that the overall “tone” of the Central Bank was relatively “hawkish” - the Central Bank is not planning to soften monetary policy in the future.

The statement of Elvira Nabiullina (the head of the Central Bank of Russia) was quite interesting and strange for us that he case of the founder of Baring Vostok Michael Calvey did not affect the Central Bank’s assessment of the investment climate in Russian. Such statements call into question the independence of the Central Bank. Our position remains unchanged - we are looking for points for sales of the Russian ruble.