Now that the holidays are behind us, the market is once again focused on the economic reports. This week promises to be very busy. The US dollar experienced a strong demand from the opening of trading, as many expect that published in the coming days, US data confirm the strength of the economy and dispel doubts about the December Fed rate hike. As a result, EUR / USD sliding to 1,0565, GBP / USD – to the April minimum of 1.4993. Retail sales in Germany fell short of forecasts on a monthly basis, however, for the current year figure rose by 2.8%, showing the best gains since 1994. Apparently, the recovery of the labor market and the flow of refugees have created favorable conditions for the increase in expenses.
Commodity markets have demonstrated again contradictory dynamics. Copper (HG) again weakened in the area of 2.0450, Gold tried to recover from Friday’s crash, but Brent crude oil slipped again in the area of 44.50 dollars per barrel. Stock indices were moving in different directions as though DAX (FDAX) did not change himself and continued to move upwards.
Chart of the day:
Economic data of the previous day:
- Japan: October retail sales up 1.8% vs. -0.1% in September
- Germany: October retail sales -0.4%, + 2.1% vs. 0.0%, 3.5% in September
- US: November Chicago PMI index 48.7 vs. 54.0
Forecast for Tuesday, December 1
It will be a very busy week, and for stock indices around the world will have plenty of reasons for movements. To date, more than others pleases the speaker of the German DAX (FDAX), which receives support in the double weakness of the national currency and expectations of the soft tone of the European Central Bank at the next meeting. It is worth noting that the European regulator has long made it clear that he was ready to use all of the most innovative forms of influence on the economy with a view to stimulating. And all of this is already in the price of the German benchmark. Most likely, the dynamics of the DAX this week will be divided into two phases: “before” and “after” the meeting.
From this we can see two tactics. Until Thursday the index can feel the support, so there may be short-term purchases with a view to 11540. However, during the actual performances of Mario Draghi might work strategy of “sell the fact” that means that it is on Thursday may be the most attractive levels for the medium term sales index.
Commodity and raw market
Brent again moves to the lower limit of the established range 43,00-46,50 last week. At this time, one of the drivers of this movement was Iran. Tehran became the owner of the two-day conference last weekend, inviting foreign investors to 70 oil and gas projects. Iranian authorities believe that all sanctions will be lifted within the next 5 weeks, after which it will flow to the flow of money, which will lead to a sharp increase in production of oil.
So, a few figures. In October, the country was producing 2.7 million barrels of oil per day. The authorities plan to bring it to 5.7 million by the end of 2020. Last year, exports fell to 1.4 million barrels a day from 2.6 million in 2011, even before the imposition of sanctions. Once sanctions are lifted, Iran, plans to add to the market of 500 thousand barrels per day. Considering that already November 4 will be a meeting of OPEC in terms of production, the tension in the market is growing. While the baseline scenario laid unchanging situation that puts pressure on the position of the oil. This leads us to believe that until Thursday, Brent will move to the lower boundary of the range, then may turn around “on the facts“. In this regard, we can consider two strategies: current short selling in order to 43.00 and the subsequent purchase of the approach to the specified point.
Among other things, it attracted great interest in the dynamics of GBP / USD. The pair came under pressure of capital flows on the EUR / GBP, observed between the euro area and the United Kingdom at the end of the month. However, the main reason for the weakness of the pound lies in the comments of the Bank of England and the economic data, which have not yet created the conditions to speak about the need to increase rates.
Given the proximity of the meeting FOMC, which could take place the transition to full tightening of monetary policy the Fed, GBP / USD can only accelerate the fall. At the moment, the key is the breakdown of a strong technical and psychological barrier of 1.50. If the breakdown takes place, the movement may continue up to 1.4950. However, it is this area we consider to be the most attractive for the medium-term purchases pairs.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.