Analytics › MARKET REVIEW OCTOBER 29 - NOVEMBER 02

MARKET REVIEW OCTOBER 29 - NOVEMBER 02

EUR / USD

The main pair is close to setting a new low of this year, but in order for the bears to have enough strength for this, let’s consider the key events of the upcoming week. On Monday morning, the trade corridor 1,144-1,134 should be highlighted, since it is where the struggle begins.

As usual, Monday is not a particularly volatile day. Although the basic price index of personal consumption expenditures may slightly shake the value of the pair, especially if the actual data will differ greatly from the forecast. However, Tuesday is an interesting day.

The Eurozone will unveil the first estimate of GDP for the third quarter. On an annual basis, a slowdown in the growth of the indicator is expected, when the quarterly growth will remain at the same level. As we noted earlier, the expectations of the ECB members are not met, there are no hints at the expansion of the European economy. Which is not at all fitting for the European currency. States tomorrow will publish consumer confidence index, where the indicator is also expected to decline.

Wednesday will tell us about changes in inflation in the European Union, which stubbornly does not want to accelerate, leveling the fiscal stimulus of the ECB. Although, as expected, the base indicator should accelerate by 0.1%. Unemployment will remain at the same level.

ADP will publish preliminary data on changes in the number of people employed in the non-agricultural sector in October. Also, the labor cost index and business index will be known.

In anticipation of the release of the NFP on Thursday, the United States will announce the state of business activity in the country. The level of productivity in the non-agricultural sector, and the business activity in the manufacturing sector. Data is expe cted to be multidirectional.

On the first Friday of the month, everyone is waiting for a report on the US labor market. Already, conversations are beginning to go around that the dollar is supposedly exhausted. The last release was not the most optimistic, though not terrible. The weakness of the last report was justified by two hurricanes that hit the States. Representatives of the Open Market Committee (FOMC) predicted the resumption of the expansion of the American economy. Well, let's see. If the report is as weak as last month, you should think about selling an American.

Do not forget about geopolitical news, about which there is nothing in the economic calendar. In a week in the United States there will be elections for the Senate, the expectations are very different, more uncertain, which in the future will interfere with the US dollar.

MARKET REVIEW OCTOBER 29 -  NOVEMBER 02

GBP/USD


The British Pound Sterling situation is similar to the euro, it is also close to a new minimum of this year. Brexit remains the main driver. London still can’t find a consensus with Brussels on the border with Ireland. At the same time, the largest participants in the EU financial sector are preparing for the worst scenario of separation between Britain and the European Union - without a deal, once the largest financial capital of Europe risks losing this status, which is very disliked by the competitors of the British Prime Minister Theresa May.

The moods in the government of Great Britain are heating up. There have been rumors for several weeks about attempts and threats to overthrow May. However, for now, these are only rumors and opinions. Opponents of the prime minister understand that now they need to be more united than ever, and the internal split will lead to even greater uncertainties, which can literally bring down both the pound and the prospects for expanding the economy as a whole.

This Thursday will be a meeting of the Bank of England on monetary policy. Before the announcement of the decision on the interest rate of the regulator, the Bank of England reports on inflation will be released. It is expected that all regulators’ members’ unanimous decision will leave the interest rate at the same level. As we said earlier, it is not clear how Britain will leave the EU, since the regulator is likely to refrain from further tightening of monetary policy.

However, the speech of the head of the Bank of England Mark Carney can contribute to the strengthening of the British Pound Sterling. Alternatively, on the contrary, relax, if the rhetoric of the speech of the representative of the regulator is pigeon and vague. As you can see, high hopes have been placed on the shoulders of the head of BA.

MARKET REVIEW OCTOBER 29 -  NOVEMBER 02

USD/CAD

The Canadian dollar more than the rest was underestimated this year, the reason for which was the disagreement between Canadian Prime Minister Justin Trudeau and the American President Donald Trump. However, fears subsided, a consensus has been found, and a trade agreement has been concluded. Moreover, the US trade war with China in part helps Canada. Therefore, the country of the Maple Leaf increased oil exports to China, the same fate befell upon the Canadian legumes and soybean crops.

In addition to favorable trade drivers, technically the picture is also favorable for Canadians. The pair has been trading in a moderately bearish channel since mid-summer and has now reached its upper limit. This five-day trading week will provide us with volatile news.

Therefore, on Tuesday, the head of the Bank of Canada Stephen Poloz will speak late tonight, and on Wednesday we will learn about the country's GDP. As we already know, GDP is an indicator of the health of the economy of any country. Given the above arguments, we can expect a further expansion of the Canadian economy.

On Friday, at the opening of the US trading session, Canada will report to the labor market. A slight increase in employment is expected when unemployment will remain at the same level. In general, very positive expectations and prospects for the Canadian dollar. Yet another test of the key resistance 1.29 is possible.

MARKET REVIEW OCTOBER 29 -  NOVEMBER 02

OIL

“Black Gold” starts the week with a decline, as cautious traders fear the possible continuation of a fall in financial markets. The strength of the dollar is also putting pressure on oil prices, stressing earlier this week that economic growth may slow down, especially in emerging market countries in Asia. The pressure of a strong dollar is felt by emerging markets, as a strong dollar reduces the purchasing power for holders of other currencies. As stated earlier.

Hedge funds have reduced their bullish oil positions in the last week to their lowest level in more than a year, stated the US Commodity Futures Trading Commission on Friday.

There are also signs of a slowdown in world trade, with prices for dry cargo and container ships transporting most of the raw materials and industrial goods being under pressure.

However, the tension remains before the sanction on Iranian oil coming into action.
Recall that they will come into force on November 4, that is, next week the oil market will be much less than Iranian exports of raw materials. The Asian market is suffering the most, as the countries of this region consume more Iranian oil than the rest.

On the other hand, the drilling and production of crude oil in the United States increased to (approximately) 11 million barrels / day. The production will continue to grow. American drillers added two more oilrigs by Friday, October 26, the total number reached 875, which is the highest figure since March 2015.

MARKET REVIEW OCTOBER 29 -  NOVEMBER 02


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