News background and trading ideas for 07/01/2019

7 Jan 2019

Let’s begin our review with last week events. The main one without doubts was flash crash in Japanese yen pairs. Although everything is back on track so far, we continue to consider, in current uncertainty state, purchases of Japanese yen is a quite well trading idea.

Completed a very busy week data on the US labor market. NFP figures frankly surprised: +312K with a forecast of +184K. No less surprising were sales of the dollar on Friday. The reason is not excellent employment data, but the comments of Fed Chairman Jerome Powell, who noted that the Fed is ready to pursue a flexible monetary policy. Markets took this as a hint that the Fed would not expect a rate hike in 2019, and it could even be reduced. This, of course, is not a sentence for the dollar, but we have found another confirmation of our current idea of the expediency of selling the dollar on the foreign exchange market. Despite the excellent data on the NFP, we continue to believe that the year 2019 will be difficult for the US economy, and therefore for the dollar as a whole.

Talking about the ongoing week, admit, that there will be not significant events so much. First of all, the decision of the Bank of Canada on the interest rate on Wednesday will worth our attention, as well as minutes of last FOMC meeting. Besides, on Friday the data on the UK GDP will be released. This week could be very difficult for the British pound. The fate of the Brexit can be decided in a coming week, maximum two, so we are going to earn on the pounds’ movements. Let us remind our position: parties will finally do a deal and Great Britain will get a “soft” Brexit. That means that the pound is hardly undervalued for a long time yet. Its growth potential counts by hundreds of points. That is about another flash crash, which is almost unavoidable if we are right.

Despite some optimism increase in the oil market in a price dynamic of the “black gold”, the situation basically unchanged: officially, oil reserves in the US did not decrease, whereas stocks of petroleum products rose sharply. The US continues to produce at maximum levels. So we see no reason to change our position and continue to recommend oil sales both in the mid-term and within the day.

Among others our trading ideas, admit, intraday and mid-term gold purchases, sales of the Russian ruble on every investments horizon, as well as buying of the Japanese yen and sales of the dollar.