Brexit, US-China negotiations and Fed's fears

A vote in the UK Parliament regarding possible Brexit scenarios. There were 8 options for solving the Brexit problem, however no clarity followed. All options were rejected by Parliament. In essence, the initiative is again returning to Theresa May, who went all-in yesterday. She promised to resign if lawmakers vote for her version of the agreement with the EU. We continue to monitor developments and earn on the pound “races”.

Yesterday's dollar growth was related to data on the US trade balance, which unexpectedly showed improvement in its condition. Instead of the expected $ 57.0 billion deficit in December, the surplus of imports over exports was $ 51.1 billion.

Despite this, voices are louder and louder from the United States in favor of easing monetary policy. So Stephen Moore (one of the possible future members of the Fed) in an interview with the New York Times said that the Fed should immediately expand the vector of monetary policy and reduce the rate by 0.5% at least. This, of course, is not the official position of the Fed, but rather Trump’s vision (Moore is his protege). This has to be borne in mind, that the pressure on the Fed will increase with time and any weakness of the US economy will be perceived by the markets as a signal favor of the Fed rate cut and the reason for the sales of the dollar.

Meanwhile the negotiations with China continue. The previous dates were clearly failed (we recall that at the end of March the heads of the United States and China should have been signed the agreement). Trump maintains his view and insists on the perfect deal. Despite the failure to meet the deadlines, the process is underway, and yesterday the negotiations were resumed. So, perhaps, in the coming weeks an agreement would still be reached.

The success of the negotiations between the US and China is a positive signal for the commodity markets, as well as the markets of developing countries. In this light, our recommendations for intraday oil and gold purchases continue to be relevant. Yesterday's data on US oil reserves unexpectedly showed an increase in reserves by 2.8 million barrels (analysts expected a decline by 2.5 million), what a little spoiled the mood of its buyers. But we still do not see a real threat to oil.

About our other trading ideas, we recommend paying attention to buying EURUSD, selling USDCAD, and selling Russian ruble.