News background and trading ideas for 10/12/2018

10 בדצמ׳ 2018

Last week ended considerably unexpected, at least for us. These were about low numbers of the NFP. +155,000 employment, which is lower than the average forecast of 200,000 (recall, we expected the exceed of the forecast). Besides, the October figures were revised downwards (from 250,000 to 237,000). Hourly wage increased by 0.2% m/m (forecast 0.3% m / m.) The only positive probably was the figures for unemployment, which continues to remain at its lowest level over the past 50 years.

There is nothing strange that the dollar has crashed after such data. Considering that the dollar is at the upper boundary of its medium-term range, there is ample space for further fall. So we continue to recommend the dollar sales in the foreign exchange market against major currencies. We would advise paying particular attention to the USDCAD sales since a block of statistics on the Canadian labor market was published on Friday, which turned out to be excellent.

Another significant news of the end of the week was the results of the OPEC meeting. It was the maximally difficult summit. Despite all the difficulties the participants coped with that and concluded an agreement. So, we get a new version of the OPEC+, in which oil production cuts by 1.2 million b/d (the cartel will reduce oil production by 800 thousand b/d, other member countries reduce production by 400 thousand b/d). Recall that the markets presumed an agreement to lower production by 1 million b/d. It would seem an excellent cause for the sharp rise in oil quotes and the start of a full and sharp correction, but in fact, it is not. Despite the rather odd reaction of the markets to an obvious fundamental positive, we recommend short-term purchases of oil in order to make money on corrections and to work out a fundamental positive.

As for today, in terms of macroeconomic statistics, it is interesting data on GDP and industrial production in the UK, but it actually will not have much impact on the markets. All attention of traders and investors would be on tomorrow's vote in the UK Parliament. So tomorrow we will have a bloodbath in pound pairs. Recall, we believe that the current prices of the pound - this is one of the most serious mistakes of the markets since the referendum on Brexit. In our opinion, the pound is highly undervalued, and its purchases are a unique occasion to increase the deposit several times in a very short time.

Talking about our trading recommendations are as follows: we buy the pound, the Canadian dollar, oil, and gold, as well as sale the dollar and the Russian ruble.