The US dollar throughout the day remained under pressure in anticipation of protocol FOMC. Meanwhile, the ball was ruled by European currencies. EUR / USD is supported even against the background of negative statistics yesterday revised the German organization for a fall forecast German GDP in 2016 to 1.8% from the preliminary assessment of 2.1%. Meanwhile, the Bank of England began its performance was suspended growth GBP / USD. At the meeting it became clear that the representatives of the MPC still dissatisfied strength of inflationary pressures, which gives a clear hint for a longer period of ultra-low interest rates.
FOMC minutes did not bring anything new, but only confirmed that before the release of weak data from the labor market most of the members of the Committee was set up to raise rates this year. However, the stock market was this enough – they did not get too much aggression, they saw the doubt, so continued growth indices. Gold hovered around 1142.00 dollars per ounce. Meanwhile, Brent was supported by rumors about the upcoming OPEC meeting. Active updated 5-week high at 53.49 dollars per barrel, while the closure slightly rolled.
Chart of the week:
|Brent crude oil chart
Economic data of the previous day:
- Deutsche Bank announced a huge write-downs of assets: 5.8 billion euros of goodwill and EUR 600 million for 20% stake in a Chinese bank Hua Xia Bank
- The Bank of England left rates unchanged 79 month in a row, voting in a ratio of 8 to 1
- Germany: August, exports decreased by 5.2%, showing the worst level since January 2009
The forecast for Friday, October 9
We have not touched the German DAX (DAX), despite the fact that the index remains attractive for trade due to the high volatility of this asset. Despite the impressive drop in benchmark it is still able to show the full consolidation of once all the fears about global growth will go on stage. Support DAX and may have a high chance of additional stimulus, rumors of which appear on the market more often.
Fuel to the fire poured and yesterday’s news that Germany‘s GDP growth for 2016 was revised to decrease, indicating that the largest economy in Europe can not pull the whole burden of responsibility in the eurozone. The record since January 2009 decline in exports only confirms this fact. The immediate goal on the way up can be a mark 10140.
Commodity and raw market
Despite the initial correction, Brent to a close on Thursday could grow. This helped a lot of rumors about what will happen on October 21 “technical” meeting of the member countries and non-OPEC countries. No further details of the meeting were received, although the market expects from this meeting talking about reducing production quotas. This is very good news for oil. Recall that in 2008 it was an emergency meeting of the cartel energy carrier has helped to turn around and resume growth after an impressive collapse.
Aside from the rumors, according to our estimates, the current levels are quite close to fundamentally sound, so Brent, will likely continue to trade in a range, albeit at a high price levels – around 50.20 – 53.40. Weak economic reports confirming the problems in the US economy and China can lead to short-term sales in the area of 49.00, but then the asset will recover quickly in a comfortable range for him.
Pay attention to the copper (HG). Yesterday, with the return of the Chinese market after the holidays and returned volatility, sending asset nearly 1.5% down. In the context of weak growth the Chinese economy is difficult to hope for a non-stop growth of the metal. Copper is now testing support for 2.33 and it is possible that an attempt will be successful, but we do not expect a big sale of the asset. For a more stable dynamics there are factors of a fundamental nature. According LME non-ferrous metals (LME), copper stocks fell for the eighth consecutive day, noting the lowest since June this year, and the volume at Chinese warehouses, according to rumors, last month fell by 22%. It is possible that in the region of 2.27 asset turn and again resumes growth with the immediate goal at the level of 2.3930. We do not rule out that it will be such a trading range in the coming month.
In currency markets, the main story is a sharp reversal of the pound sterling and the likelihood of achieving its medium-term “bottom“. GBP / USD pair over the last couple of days has increased by 200 points and has already broken through the upper boundary of a two-week range. However, for the pair is not the limit of movement, given that in the first half of September, it is easy to lose 550 points. In fact, every year in this impressive reversal on GBP / USD was at least 500 points, and such cases in 2015 already 11. If this time it will go to continue the script, we can safely expect that from a minimum of in the area of 1.5106 the pair will reach 1.56.
Capital flows in the framework of the merger of Anheuser-Busch and SAB Miller. Can a couple of weeks to maintain interest in the pound sterling. The role played by the sharp rise in industrial production above the predicted values. This meeting of the Bank of England was the biggest risk for GBP / USD. If the pair will outlive him, the achievement of the intended purpose is likely.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.