News background & trading ideas for 27/02/2019

The breaking news keeps on coming from the Brexit fronts. Yesterday we wrote that the vote over Plan B on the twenty-seventh of February could not happen. But the delay of the vote was not enough for Theresa May, and there’s already talk of rescheduling of Brexit terms. Which is that she had repeatedly denied. Simultaneously, there were information flows from the EU that this could be not weeks or months, but even years (!). So, is beginning to give the impression that the Brexit is slowly being railroaded. Brexit fatigue has reached a critical mass, and such a solution could serve on the quite fertile ground.

What does this mean for the pound? The answer is given by yesterday’s dynamics. This is good news for pound buyers surely. Since, recall, at the time of the referendum, the pound hovered at around 1.50. Thus, our position has once again found a confirmation, and we continue to recommend pound’s purchases since its growth potential is far from being exhausted. But the situation continues to be volatile. So we are keeping an eye on things.

It is restless and bad in the rest of the world. First of all, it’s about the tension between the already long-standing hostile neighbors - India and Pakistan (India launched an air strike on the Pakistan territory). Since both countries possess nuclear weapons, and the conflict is quite deep, the development of the situation may become worldwide. Which, of course, does not contribute to reassure investors in financial markets. In this regard, we recall our recommendations for gold purchases.

The significant event of yesterday was the speech of Fed Chairman Jerome Powell to the Senate Banking Committee. The key message of Powell’s speech is that now is a good time to stand still on the monetary policy. It would be weird if he said something else. We perceive his comments as neutral, and remain our dollar’s position unchanged, besides recommending its sales in the foreign exchange market.

As for macroeconomic statistics, important data did not come out yesterday. Today is much more interesting in this regard. First of all, we are following data on orders for durable goods in the US and inflation data from Canada, as well as monitoring the second round of Jerome Powell's speech.

We have placed a major emphasis on news from Great Britain. There may well be bursts of pound’s volatility today, so it would be ridiculous passing through the opportunity to make a profit.

Our trading positions are unchanged: looking for points for dollar’s intraday sales in the forex market; buying oil and gold within the day on the way down, selling the Russian ruble; buying the pound.