News background and trading ideas for 18/01/2019

Jan 18, 2019

Yesterday became a first not revolutionary day for Great Britain and Brexit. Based on the pound’s dynamics, the markets finally got our long-standing idea, which we’ve been voicing since September - the harsh Brexit is not the option, and they have to agree. Actually, yesterday Theresa May was trying to dealing with it. She started with her British opponents in order to create a list of conditions that must be achieved for success in Parliament at the next vote. Well, then the turn of the EU.

Do not forget about alternatives. HSBC Holdings Plc has radically changed its attitude towards the pound and is now expecting its growth since they believe that it is very likely a scenario in which Brexit will not take place at all. And in this case, according to HSBC analysts, the pound could rise up to 1.55. By the way, about the same thing, yesterday said the leader of the British opposition Jeremy Corbin, who said that a second referendum could well be a way out of the current impasse.

Shutdown in the USA continues and the longer it lasts, then more concerns it will rise due to the consequences for the US economy. As a matter of fact, about a million consumers, taxpayers, mortgage payers, etc. etc. drop out of the economic system for almost a month. That cannot happen undetected for the US economy. By some estimates, each week of downtime costs the economy a growth loss of about 0.13%. And according to Bloomberg, every day of such downtime costs the economy $200 billion in lost revenue. What are we all about? It's all about the dollar should be sold. Perhaps the negative effects will appear a little later, but it is inevitable anyway.

Today is rich for diverse macroeconomic statistics from all over the world, so stay in business. First of all, we should pay attention to retail sales in the UK (the pound, despite the current increase, is unsafe), inflation in Canada, as well as industrial production in the USA.

Yesterday’s inflation data in EU came out in line with forecasts, so no fundamentally new information the markets didn’t get.

As for our trading recommendations, we recommend buying Japanese yen and gold amid sustainable demand for the safe-haven assets. Moreover, we either recommend buying the Canadian dollar against American one within the day, mid-term sales of the oil, as well as the Russian ruble, which strengthening is just a temporary phenomenon, so this means that current points are brilliant from the sales positions.