News background and trading ideas for 09/01/2019

Jan 9, 2019

Perhaps the main event of yesterday was the information that the terms of Brexit can be postponed. According to The Telegraph, which in turn refers to 3 different sources in the EU, the UK and the EU are discussing the possibility of postponing the enforcement of Article 50 from March 29 to a later date since they are afraid of that they will not be able to reach a compromise agreement by this time. The reaction of the pound followed immediately - it lost about 100 points against the dollar. Although, on the contrary, we consider this news as totally positive for the pound. Since in this case, the chances of resolving the current impasse sharply increase. So we recommend using yesterday's decline and buy a pound cheaper.

Another frustration of the day became statistics from Germany. Industrial production there unexpectedly collapsed by 1.9% (in November). At the same time, it also declined in October. That is, it is going to recession in the largest economy in the Eurozone. However, the euro quite stoically has suffered this news.

In the USA the battle between Trump and the Democrats continues. A ghost of a state of emergency in the country is in the air, while the shut-down meanwhile in the midst of. It is not wise to buy the dollar amid this, accordingly, we continue to recommend it sales.

Negotiations between the US and China also continue, but in this regard, the news comes with a plus sign. The outcome has been the longest oil increase in the last 17 months. Also, oil was supported by news from OPEC, according to which OPEC+, it seems, began to comply with not only on paper but in fact. So a double positive for oil naturally led to a rise in prices for “black gold”. And finally, the data on oil reserves from API finished off bears (reserves decreased by more than 6 million barrels). However, so far all this drawn maximum to a correction, which means that mid-term oil sales remain relevant. Maybe just the entry points have become much more attractive.

The Russian ruble continues to strengthen, while we keep recommending it sales. The fundamental negative, which surrounds the Russian currency, is too substantial.

Today the Bank of Canada has to announce its decision on the parameters of the monetary policy. It is unlikely that the rate will be raised. Nevertheless, purchases of the Canadian dollar continue to seem like a good trading idea to us.