News background and trading ideas for 08/01/2019

8 בינו׳ 2019

Yesterday regarding the news background was restful enough, and today the agenda is not worth something absolutely extraordinary as well. Although it is worth paying attention to the data on the US trade balance. Eventually, the persistent trade gap is one of the most problematic areas of the US economy in general and the dollar in particular. So the markets may well get another reason for selling the dollar.

Besides, it would benefit from monitoring the data on business sentiment in the Eurozone. They are, already traditionally, not really encouraged, and in the light of an extremely minor ending of 2018, they may well be unpleasantly surprised.

Otherwise, it is reasonable to expect the development of current trends so far. Despite the fact that Powell, at considerable cost to the dollar, was able to provide some comfort for the financial markets, it is clearly too early to talk about getting investor’s good sentiments back. Meanwhile, negotiations are continuing between the US and China over a compromise in trade wars. Despite the rather optimistic comments from both sides, it is still in the process and it is obviously early to talk about some results. So, purchases of the Japanese yen and gold continue to seem like good trading ideas. Moreover, we would probably give preference to the Japanese yen, which, after a flash crash last week, approached points that were very interesting for sale.

Talking about the USA, we have to admit that the shutdown is ongoing. According to Bloomberg, every day of downtime costs the US $200 million losses per day (this concerns both direct losses and lost revenues). All this only reinforce our belief that sales are the only reasonable direction for the dollar trading so far. Especially in light of Trump's statements about the declaration of a state of emergency.
Some relief in the financial markets, which began on Friday, continues to have a positive influence on the oil market. However, we continue to consider that the increase of the oil - it’s just an occasion for it more expensive sales.

Please note that how well the Russian ruble is get itself. It sales seem to us sole, so any growth should be used to open short positions. By the way, the Russian ruble entered the top five of the worst currencies of 2018 in terms of profitability, losing the lead only to the Argentine peso, Turkish lira and Brazilian real, but ahead of the South African rand.