The US & China, Russian reforms and an oil situation

Jan 17, 2020

After the United States and China completed the first phase of negotiations, the result of which was not as rosy as many expected, the markets decided to take a break and continued to develop existing trends.

Note that the current optimism has exhausted itself. But the negative on the horizon more than enough. Only the first step has been taken. Now the parties need to move on and begin the negotiation process on phase number 2. Given that the first phase was an extremely painful process, we are waiting for a problem on the way to the second.

Do not forget also that the first phase still needs to be performed. For example, China must buy hundreds of billions of dollars of agricultural products from the United States. Not the fact that he will do it.

Therefore, you should not expect a happy ending in the foreseeable future. Accordingly, we continue to look for points for the purchase of safe-haven assets both within the day and in the medium-term - gold and the Japanese yen.

The growing pressure on the oil market is largely due to market concerns. Trade wars have shown themselves to be extremely destructive. Their continuation is further damage to the global economy, which in turn will lead to a decrease in oil demand.

Nevertheless, we consider current oil prices favorable for intraday purchases (with small stops). The situation in Iran is very unstable; in Iraq, too, not everything is calm. That is, problems with the supply of oil on the market can arise at any time.

In the news plan, the most interesting continued to happen around Russia and the Russian ruble. A more detailed analysis of the situation and our recommendation to sell the Russian ruble we will do in a separate review. In the meantime, we note that many experts perceive the dissolution of the Government and Putin's initiative to amend the Constitution as the next qualitatively new level of the usurpation of power. Which in itself is bad, because it deprives at least some hope of a change in the course and manner of behavior of the Russian Federation in the international arena with all the ensuing in the form of sanctions and the role of the rogue state.

As for macroeconomic statistics on Thursday, the main event of the day was the publication of data on retail sales in the United States. The data came out exactly as part of the forecasts.

Today, in the news plan, it is interesting with data on China's GDP (released as part of forecasts), as well as retail sales in the UK, inflation in the Eurozone and industrial production in the United States. In general, the day promises to be eventful, which means movements in the foreign exchange market and, accordingly, the possibility of earning.