News background and trading ideas for 12/12/2018

12 дек. 2018 г.

After almost a heart attack on Monday in the financial markets, Tuesday was a pretty quiet day. From the one hand, markets needed a day-off, from the other - a general fundamental background acted calming, besides there were no new stimuli. So, the day was totally calm.

We can remind unless the UK labor market statistics, but as for traders there is no time for it. There are many relevant things to deal with. Apart from rumors about a non-confidence vote, there was a lull on Brexit fronts. Formally, it is a strong domestic political crisis, but for the fact, we don’t think it has chances for development. There are no voices for voting about the resignation of May, there are no candidates for a replacement, and, above all, the main resignation will not solve anything. It only complicates the already problematic process of Brexit.

Today promises to be more interesting and intense. From macroeconomic statistics, first of all, attention should be paid to inflation data from the Eurozone. It is especially valuable because on Thursday the ECB will announce its decision on the parameters of the monetary policy. Accordingly, a sharp hike in inflation may be perceived by the markets as a signal for euro purchases in the prospect of a tightening of monetary policy in the Eurozone.

Besides, Fed Chairman Jerome Powell is due to speak in Congress today. Considering that a couple of weeks ago, he was already able to shake up the markets with his comments about the Fed reaching the neutral level of the rate, so a strong reaction from the dollar is also possible today. Speaking of the dollar. We continue to recommend its sales in the foreign exchange market. Motivation: technically, he climbed high enough to adjust, but in terms of fundamental analysis, the signals sent by the US to financial markets have recently been generally on the dollar sales side.

Another interesting and significant, but already for the oil market, news of yesterday was the publication of Russia's position on the new OPEC+ deal. Russian Energy Minister Alexander Novak said that Russia is going to reduce oil production in the first month of 2019 by 50 or 60 thousand barrels per day compared to October levels. That is, the new figure will be 11 thousand barrels per day lower than in November. What does it mean? In fact, this is a statement of the fact that Russia does not participate in OPEC+ in the near future. This news casts doubt on the efficiency of the agreement. It turns out that Saudi Arabia should take the whole hit to the increase in supply in the market (it should reduce production by 900 thousand barrels per day compared to November, that is, 82 times more than Russia). Will the Saudis do this? Do they need it? There are serious concerns about it. In this light, it becomes clear why oil refuses to grow on such a pronounced formal fundamental positive. Nevertheless, while oil is above 50 (WTI brand), we believe that it is worth trying to catch the correction and it is still very likely. So we continue to recommend short-term purchases of oil this week.

Our other trading recommendations are constant: we buy the pound, the Canadian dollar, oil, and gold, as well as sell the dollar and the Russian ruble.