News background & trading ideas for 07/02/2019

Feb 7, 2019

The highlight event of yesterday in foreign exchange market, which took most of traders and analytics by surprise (we’ve been caught as well, but in defense we note that the Australian dollar mainly is under our radar) became an announcement of the Governor of the Reserve Bank of Australia, Philip Lowe, that the Central Bank is moving to a neutral position in monetary policy (before that, the Central Bank announced a tightening of policy in the long run). The logical response of the Aussie to this news was its sharp decline. In general, there are high chances to its further decline, so we would recommend to beware of the Australian dollar purchases.

Among other news of yesterday, it’s worth noting unexpectedly positive data for the dollar on the US trade balance, the deficit of which was $49.3 billion, with the forecast: $54.0 billion. As a result, the dollar slightly strengthened. But we are still taking things slow with its purchases. The reason is a possible escalation of the political situation in the USA.

Today will be interesting firstly by the announcement of outcomes of the Bank of England meeting. Although we shouldn't wait for any revelations. The rate will remain unchanged while comments will be around Brexit and related to its concern. By the way about Brexit. Theresa May yesterday has visited a Northern Ireland in search of compromise offer on borderline, which is the main issue of Brexit process. After North Ireland, she is going to Brussels. So, we will get some news from the Brexit field already today.

In this regard, the next discharge of the insider (or maybe just rumors) that the British ministers secretly discussed the plan for an 8-week delay of the UK exit from the European Union became quite symptomatic. That is, Brexit can be rescheduled for May 24th. It is likely that this kind of news can come from Brussels today. This is positive for the pound, so we continue looking for points for mid-term purchases.

It is noteworthy that yesterday our EURJPY sales recommendations worked out quite well. Same cannot be said of oil purchases. The asset again tried to go below 53.50, thus increasing the downward pressure on the asset. Recall, we consider the level of 53.50 (WTI brand) as a kind of Rubicon for oil. As long as the asset is below this mark, we recommend intraday sales, and if this mark is exceeded, you can turn over into purchases.

Gold is approaching the optimal points for purchases. As long as the asset is above 1294, we see no threats for long positions. So buy from the current, add around 1295 and make money. Minimum profits are set at 1320, and stops are placed below 1290.
And once again call attention to amazing points for sales of the Russian ruble.