Review for November 4: the labor market will solve everything. Forecast for Friday, November 5

By | November 5, 2015

At the end of the day in the spotlight were the two currency pairs: GBP / USD and USD / JPY. First come under pressure not only due to the fact that to become aggressive MPC members did not join the new one, but also because the overall tone of the speech Mark Carney sounded more restrained than in the previous meeting. As a result, GBP / USD lost more than 150 points, ending trading at around 1.5210. USD / JPY was supported by growing hopes for an early tightening of monetary policy of the United States – the first time a couple from 24 August touched 122.00 mark.

Stock indices in general, showed a positive trend, with more than others glad the Japanese Nikkei (+ 1,1%), received good support from falling yen. Gold continues to fall, slip into the area month low of 1104.39 dollars per ounce and Brent lost a whole day near the 48.40 dollars per barrel.

Chart of the day:

gbp usd chart
GBP / USD chart
Economic data of the previous day:
  • The Bank of England voted the previous level of rates 8-1 and the predicted inflation below 1% in the second half of 2016
  • Facebook has reached a historical high of 104.13 in response to the positive financial statements: EPS $ 0,57 vs. $ 0.52
  • There are rumors that Apple will release iPhone before the traditional September 7
Forecast for Friday, November 5
Stock market
The center of attention is the recent speech by Janet Yellen, which has generated streams of demand for the US dollar, and led investors to believe that the tightening will take place in December. Nevertheless, the market has yet to see how strong the US economy, and whether it is ready for such a strike, as the rate increase. We have to admit that the latest data on business activity in the service sector is really paint a beautiful picture: the index not only fell in line with expectations, but reached, celebrated for the last 10 years, only once.
Meanwhile, the employment component also pleased – in August 2005, we have seen such levels only in July 2015 and today. Note that if the level of employment increased by 223 thousand. At this time, under the influence of aggressive comments by the Fed the market has revised its expectations for the Non-Farm Payrolls on the increase, so it is likely that even when matching the forecasts of the primary market reaction will be disappointment in the data Closeouts with the relevant US dollar and rising stock markets. We have already noted the likelihood of traffic Dow Jones (YM), NASDAQ (NQ) and S & P (ES) to the nearest resistance levels at 18000, 4765 and 2120, respectively.
Commodity and raw market
The world’s largest oil exporter, Saudi Arabia, yesterday raised its prices for December volumes for their Asian customers and 30 cents, although it was expected that the increase will amount to only 25 cents. This could be perceived as a positive sign, if not simultaneous price decline for US buyers.
Brent at what is happening not responded locked in narrow ranges and observing the dynamics of the US dollar.. It would not reduce the amount of US production, denominated in US dollars the price of energy is significantly dependent on the quotation USD. If today’s labor market report will confirm the strength of the US economy, it can only strengthen the dollar and, consequently, to put pressure on quotations of Brent, which barely held near 48.00 dollars per barrel. When a break-down, the asset could once again return to the level of 46.80.
Pay attention to the behavior of Bitcoin (BTC). On Wednesday, he grew more than 20%, touching a historic high 459.21, but on Thursday turned around and suffered a rather impressive losses. It’s all just a few influences. First, the stock market crash in China has made an impressive contribution to his – investors prefer to be able to manage their funds without the threat of currency controls.
Daily trading volumes cryptocurrency increased 2-3 times the normal levels observed another 3 weeks ago. What is important, not only increases the value of Bitcoin, but interest in its use if the volume of transactions will continue to increase at the same rate, it can have a huge impact on the market of digital currencies. Current correction after an impressive growth can offer interesting entry point long positions with the immediate goal at around 420 near highs reached a year ago.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.
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