News background & trading ideas for 21/02/2019

Yesterday was as well rich at the events.
News about the pressure of the United States on China in order to force the Celestial Empire to use the devaluation of the yuan as a tool for obtaining an advantage for its exporters was the most interesting for the foreign exchange market. As a result, the yuan has been strengthened. But everybody continues waiting for a big decision about the end of the trade wars.

With equal interest, markets observe the Brexit. Yesterday was held a widely announced meeting May and Juncker. Parties stated the follow-up that the negotiations were constructive and they need to meet again soon. That’s mean that it came to nothing. Meanwhile, domestic political crises are amplified in the UK: deputies are forming new groups, ministers are trying to negotiate behind May’s back about the postponement of Brexit terms. Anyway, the intrigue is ongoing, when the time is running out. It is expected that the next vote on a deal in the parliament will take place already on the twenty-seventh of February. Our position remains unchanged - looking for points for the pound’s purchases, since we believe in the triumph of common sense and that Britain will not leave the EU without a deal.

Another significant event of yesterday was a publication of the minutes of the last FOMC Fed meeting. These minutes interested the markets especially strong since precisely in January the Fed made a strong maneuver in changing the vector of monetary policy from "tighten" to "neutral." However, there was nothing fundamentally new. Most FOMC members currently do not have clarity of what to do with the rates. Besides, there was a fixed necessity to announce plans of draw down the normalization of balance by the Fed. The dollar, in general, was cool about the text of the protocol, since its key points had already been included in the price. So our position for the dollar is unchanged - we are looking for points for its sales.

Oil has slightly slowed the growth yesterday, amid reports that half of OPEC+ participants are not meeting their obligations. According to Bloomberg, only 10 of the 21 parties to the treaty fully fulfilled their commitments. The maximum conformity with the OPEC+ conditions was demonstrated by the Cartel member countries (86%), and the minimum one - by the producers that are not included in it (25%). Thus, OPEC+ #2 is still behaving like OPEC+ #1. Firstly, then was very difficult either with the fulfillment of obligations, but over time, the countries reached 100% compliance with the norms after all. Let's see how it will be this time. For oil, this is quite a strong bearish signal, but until the asset is above $54 (WTI), we continue to recommend intraday purchases of oil.

Gold still felt quite confident, so its purchases remain in the to-do list. But we continue to recommend to be extremely careful. Gold is very high so far but can collapse very sharply and unexpectedly.

As for today, well, something extraordinary is not envisaged. Although the day can hardly be called calm one because of an abundance of macroeconomic statistics, starting with the Australian labor market and economic activity of Japan, ending with inflation and business activity of Germany and the Eurozone, as well as durable goods orders and business activity in the USA.