Trump wishes, Fed protocols and recession in our minds

22 Agu 2019

The U.S.A. is going through the apprehension as to further economic downturn, therefore, preventing options of the deceleration of economy are being discussed by the US. Tax relief and rates cut are one of them. As for another one - 100 basis points, the Fed comments will be heard on Friday ( Chairman Jerome Powell will speak at the symposium on August 23rd ).

As for the Fed current position, according to the text of the minutes of the last FOMC meeting, some representatives of the Central Bank advocated a more aggressive reduction in rates - by 50 basis points at once. But on the other hand, some FOMC members did not consider it necessary to cut rates at all. So the market expectations regarding the Fed’s further actions remained unchanged: the rate cut is still expected in September. So our position is unchanged - we are looking for points for its sales.

Note that not everyone in the world considers the recession as a real threat. According to the Head of the Federal Reserve Bank of San Francisco, Mary Daly, at the moment recession is a market mood or expectations than the existent phenomenon. According to Bloomberg estimates, the economy loses about 0.1% growth from the introduction of additional tariffs, but real losses are 2-3 times higher due to pessimistic expectations.

Reasoning from this fact, market sentiment has to be fought. Negative expectations derived from concerns trade wars consequences are subconsciously derivative. So the best way to deal with a recession, both actual and illusory, is to stop the trade wars.

Statistics from the United States on the existing homes sale came out without any surprises and with the forecasts.

Thursday is interesting primarily for data on business activity in the Eurozone.

As for our trading preferences, they are still unchanged: we sell the dollar primarily against the pound and the Japanese yen; We propose to use hourly oscillators when trading gold buy in oversold zones and sell in overbought zones, we sell oil and the Russian ruble, we buy the pound mainly against the dollar and the euro.