News background and trading ideas for 04/01/2019

4 янв. 2019 г.

Yesterday will surely go down in history. Although flash crashes occur more often recently, the yen growth against the dollar for 350 points within minutes and almost 10% against the Australian dollar and Turkish lira - it’s an extraordinary event. Yesterday we even dedicated separate review and generally described reasons, as well as consequences. Actually, everything was exactly as we predicted. The markets returned to the steady-state, totally wan back enormous losses.

Despite the fact that the markets certainly deserve a break, it is likely to be very short. The fact is that already today after lunch, statistics on the US labor market will be released. So the next burst in volatility is guaranteed. Weak data can completely overwhelm the already panicking investors. And this means that the markets will again plunge into the chaos. How to make money on it? The events of recent days show that buying gold and Japanese yen from good points guarantees an income. As for the dollar, it has all the chances to be sold out and in fact, break through support 96 to begin forming a full-fledged downtrend.

Why we are so skeptical about upcoming data, especially regarding the fact, that experts foresee a quite good NFP number in 177. The fact is, that the US economy generates more and more signs in favor of slowdown in economic growth. Without new round of fiscal stimulating, the economy hardly can to demonstrate an activity increase. But regarding the current political circumstance in the USA (the new round of the reduction in the tax), it is highly improbable. That’s why we believe that past NFP numbers +155 - it’s a part of a new reality and we have to forget about such significant NFP numbers as +200. The reality has changed and such developments as disadvantages for the dollar.

In fairness, we note that yesterday's data on ADP came out with a huge positive surprise (+271K against the forecast of +178K), which leaves hope for dollar buyers - a potential background for good data could be an increase of employment during the holidays.

Keeping in mind for how much the markets are now obsessed with the prospects for global economic growth, we would not expect a significant hike in oil prices, since all attention will be focused on the weakening demand for oil. Amid historic highs in oil production from Russia, the United States, and Saudi Arabia, we don't see any reason for a significant increase in oil prices. So we continue to look for points for oil sales both within the day and the mid-term.

Do not either forget to sell the Russian ruble. Moreover, we would urge to look at USDCAD pair. Dual statistics on the US and Canadian labor markets will certainly blast a pair. So there are opportunities to make real money. We continue to drift towards sales of the pair.