News background and trading ideas for 10/02/2018

The breaking news of yesterday without doubts was a conclusion of a new free trade agreement between USA, Mexico, and Canada. The only it is called USMCA instead of NAFTA now. Since the Canadian dollar in the pair in the US has, basically, reached the frontier we have noted, we consider this trading idea as established and recommend full or at least partial fixation of positions. Depending on the entry points, the profit ranged from 200 to 300 points, which seems to us to be quite a good result for one idea. Recall, the idea was that the Canadian dollar was underestimated because of the incorrect perception of the results of the negotiations by the markets (many believed that they would not agree).
Our idea of a pound in this light receives additional confirmation. You can say a complete analogy. The situation was pulled not until the last day, but until the last hour. But in the end, the settlement was reached. So with Brexit, we believe it will be the same. And the pound is now, as the Canadian dollar, significantly undervalued, since the markets think that there will be no agreement between the UK and the EU.

Meanwhile, we continue to monitor the situation with Brexit. Talk about a second referendum subsided now, but the Conservative Party held a congress, at which Prime Minister Theresa May received support. But our top good news for the pound was that the British Prime Minister is preparing to make a new EU proposal to speed up the Brexit negotiation process on the Irish border issue. As you can see, the process goes to a logical conclusion.
For the euro, the news was pretty mixed. On the one hand, unemployment in Europe has fallen to the lowest level since 2008, and on the other hand, the EU has serious questions about Italy and its budget deficit, which may well provoke a local crisis in Europe, since Italian populists are likely to react to any criticism inadequate. In this light, selling the euro against the dollar does not seem to be the worst trading strategy.
Today, concerning macroeconomic statistics, it promises to be calm, so it should focus on the general news background.

Another exciting news regarding our basic trading ideas is worth noting the forecasts of the Ministry of Finance of the Russian Federation at the exchange rate of the ruble against the dollar until 2035 (!). The horizon of the forecast itself indicates its ridiculousness and total inadequacy. Although the trend still emerges interesting - even officials do not believe in the national currency and predict its decline (to 74 by 2035). Another thing is that in reality, it will happen much faster. So we continue to recommend sales of the Russian ruble, which will take much less time to reach 74 or higher than the Government of the Russian Federation measures. Recall that the current growth of the ruble is almost 100% due to the increase of oil prices. And all the optimism that now prevails in the budget process of the Russian Federation has the same roots. And this is a very fragile soil, which at any time can get out from under their feet. Today, concerning macroeconomic statistics, it promises to be calm, so it should focus on the general news background.