News background and trading ideas for 31/10/2018Yesterday was remembered, first of all, data on the GDP of the Eurozone. The data came out quite weak: +0.2% q/q against the forecast +0.4% q/q. By the way, this is the minimum GDP growth over the past 4 years. Business confidence indices in Europe also turned out to be quite weak. So, the future of the euro looks extremely unenviable amid the current economic situation in the Eurozone, as well as the maintenance of ultra-soft monetary policy. In this light, there is every reason for selling EURUSD, although we note that the pair has come to a very important support of 1.1340. So ideally wait for its breakdown.
Do not forget about the risks of the dollar. Amid the selloffs in the US stock market, voices are increasingly louder, predicting the collapse of the US economy. However, with regard to the excuse, nothing new there - the same old good US public debt. This song is so old and sad, so we will not comment on it somehow. Moreover, there are more important and significant processes in the world so far. Trump’s meeting with a head of China seems to have ended in failure, and it is heading for a new round of trade wars between the United States and China. Growing investor concerns are likely, so buying gold still seems like a good trading idea, despite yesterday’s decline.
Among other news, it’s worth noting the decision of the Bank of Japan on the parameters of monetary policy, announced early in the morning. We didn’t hear anything new then and didn’t see any changes. Generally, it plays against the Japanese yen. So we continue to recommend purchases of USDJPY pair.
Regarding today in terms of macroeconomic statistics, it’s worth paying attention to consumer inflation in the Eurozone. Though, after such data on GDP, even inflation growth is unlikely to spur the ECB to take active measures to tighten monetary policy. It is worth drawing attention to the ADP report on employment in the United States. Do not forget that on Friday we are waiting for statistics on the US labor market, so you can start preparing for the NFP, and the figures from ADP can be used as a kind of guide in terms of expectations.
Do not forget either about the statistics on GDP of Canada. By and large, the Canadian dollar has recently worked out quite well the fundamental factors, so today it is quite possible to work in a pair of USDCAD. We are still inclined to recommend selling the pair, but in this case, much will depend on the statistics. If the figures do not disappoint, the pair may well fall and give the opportunity to earn about 100 points.
Our recommendations on long-term strategic purchases of the British pound, sales of oil and the Russian ruble continue to remain relevant.
