News background and trading ideas for 04/12/2018

4 בדצמ׳ 2018

Yesterday the financial markets were consumed by outcomes of the G20 summit, precisely the arrangements between the USA and China. We were describing it substance in yesterday review so today we will try to analyze a long-term influence of this landmark deal on the main assets.

In order to understand which of the assets will grow on this news and, accordingly, what to buy, you need to remember which of it fell during the peak phases of trade wars. Stock markets and currencies of developing countries - this time. Commodity markets, including oil and gold, it’s two. Canadian and Australian dollars, it’s three.

So, a list of candidates to purchase this week (during this period, supposedly, must be maximum event consolidation) are more or less clear: buying Canadian and Australian dollar, looking for points for gold purchases. Currencies of developing countries can also be made an object of interest, as well as their stock markets.

That will probably be a lot of pressure for the US dollar this week. So we continue to recommend it sales, considering that it is an inseparable component of almost every liquid currency pair.

Returning to the subject of the long-term impact of the arrangements between China and the United States. For America, the positive is primarily in the ability to increase exports to China of agricultural and energy products. Accordingly, precisely these components of the economies will be the main beneficiaries. But the country's economy as a whole will also profit since we can well expect a reduction in the US trade deficit, which in itself is a big positive.

As for China, it has all chances to restore the credibility of economic growth. Which, in turn, should influence in a positive way on the commodity market as well as emerging economies (it have mostly commodity structure and depend on prices in commodity markets). Chinese economic growth will lead to the demand growth on oil and could to push up quotes of “black” gold.

By the way about the oil. We continue to adhere to short-term purchases while maintaining mid- and long-term sales. The oil has all chances to increase this week, so it will be without any sense to pass such opportunity. Besides, the informational background on the customer's side: Canada has sharply decreased oil production, while Russia and Saudi Arabia promised to come to cut in oil production. So we are looking for points for sales of oil.

It was uneasy yesterday in pound’s pairs. Other rides stem from uncertainty and tension due to the vote in Parliament. We continue to consider current prices of the pound as a gift and recommend it purchases.

Despite the fact that the Russian ruble relates to currencies of developing countries, we continue to recommend it sales even in the light of positive outcomes of G20 for emerging countries.