The coming week will force investors to be cautious, because by the end of it, the world summit will begin. The G20 in Buenos Aires is expected to begin negotiations with the leaders of the United States and China. The market cautiously hopes that, US President Donald Trump and Chinese Emperor Xi Jinping will be able to agree. More precisely, in a way that the leader of the PRC will make concessions for the United States. Such events are unlikely to take place, however there is hope.
The second important event will be the negotiation of a deal agreement on the exit from the EU by Great Britain, or rather attempts to convince the Parliament of London to support the deal, which was agreed on yesterday at an emergency summit of the European Union. The British Prime Minister, Theresa May faces a difficult task, since her parliament is already against her, and even began to collect signatures supporting an untrustworthy vote for their prime minister.
The third pressure factor is Italy. The legislators of Rome do not intend to change their draft budget for the next year, and it seems that they are ready to go against the rules and fiscal norms of the EU. As stated by the Chairman of the Council of Ministers of Italy, Matteo Salvini, “We will not take a single step back. This money will go to the development of Italy and we are not going to spend money at random. “EU members have two weeks to agree with the decision of the European Commission to start the procedure of excess deficit, and since Italy does not intend to change anything, impose sanctions. The coming week is full of speeches by representatives of regulators from both the EU and the USA.
The following economic indicators will be important:
In the USA: consumer confidence, third-quarter GDP recalculation, new home sales, personal consumption expenditures, business activity, and the Federal Reserve’s business activity from the last regulator meeting.
In the EU: the business climate in Germany, the consumer climate in Germany, unemployment in Germany, French GDP and unemployment in Germany, and the EU will end the week with inflation and unemployment.
In Summary, the economy in Europe continues to slow down and the gap is not yet visible. The US economy, on the contrary, is strong enough to expect an increase in the interest rate next month. Another question is what will be the rhetoric of the speakers this week. After all, the heads of both the ECB and the Federal Reserve will not speak this week more than once. Large speculators on the side of the dollar at the beginning of this five-day trading, as evidenced by the short and long positions of the COT. Hedge funds, on the contrary, take profits fearing the pigeon rhetoric of representatives of the Federal Open Market Committee.
The oldest protective asset was restored for two weeks, neatly and calmly. Apparently, the main buyers were hedge funds, which are forced to hedge and diversify their investors' portfolios. Temporary uncertainty associated with the possible further escalation of the trade conflict between the United States and China. The meeting of the American President Donald Trump and the Chinese Xi Jinping will be held by the end of the trading week in Buenos Aires as part of the G20 summit.
The fate of world trade will depend on whether or not the leaders will make concessions, since the United States is radically set. If China does not satisfy the requirements of the United State, you can’t call it otherwise, Trump is ready to increase trade duties from the current 10% to 25% from January next year. That will have even more pressure on both the shares of companies and the trade as a whole.
In this scenario, the US dollar will take the status of "protective asset" from gold. Therefore, it is necessary to carefully monitor the events in the world, and by the end of the week do not consider trading this asset at all.
Black gold remains in a confidently bearish trend, having updated the next annual minimum last week. The level of 52.00 did not withstand, after breaking through which the financial quotes almost reached the psychological level of 50.00. The most interesting thing is that after a thirty percent drop in raw materials, in fact, there is still much to fall. Since after all, last year’s minimum was 42.00.
However, one of the main drivers this week will be the negotiations between the leaders of the United States and China on a trade dispute at the G20 summit. As you can see in all assets, we note the importance of these negotiations. After all, it depends on how calm the climate is in a trading environment, the more oil is needed to produce fuel for transporting goods around the world. The less supply, the less demand.
The meeting of the participating countries of OPEC and OPEC + will take place only next week. Therefore, during the week you need to pay attention to the volume of production, the state of stocks of raw materials in the United States and the number of drilling rigs in the US. As reported by Baker Hughes last Friday, the number of drilling rigs decreased by three units, which may entail a slight reduction in production. However, during this week, the United States may increase the loss, as it has happened before.