Monthly Archives: October 2016

The Fed will be aggressive. The forecast for the week of October 31 – November 4

The forecast for the week of October 31 – November 4

Stock market

The coming week can be called “American“. Market attention will be focused on the publication of the decision on the monetary policy of the US Federal Reserve and data on non-farm payrolls (NFP), which can set the tone not only the stock market.

Data on the rate of US economic growth presented a pleasant surprise in the 3rd quarter. The index rose by 2.9% yoy vs. 2.5%.

These figures, coupled with rising inflation allows the Fed to wait for an early increase rates. It is possible that the regulator will not do this on November 2 as the country stands on the threshold of presidential elections. But at the same time the regulator’s rhetoric may be more aggressive with clearer hints of tightening in December.

If more and NFP data will be strong enough, the December increase is almost does not cause any doubts. But such expectations are unlikely to favor the stock indices. In this case, the S&P 500 (ES) can be fixed below the level of 2120.00, targeting a drop to the level of 2100.00. Dow Jones (YM) will be waiting at around 17820.

Commodity and raw market

Brent crude oil is still kept in the range of 51.00 – 53.70, although attempts to pass its lower bound taken. Over the weekend, will conclude the negotiations of the working groups of the OPEC countries in which they will have to decide to whom and how much to cut production. If a compromise is found, oil prices could easily go back to the area of the upper limit of the established range. I must say that such an outcome beneficial to a number of countries belonging to the cartel.

Otherwise, quotes Brent (BRN) can target the drop in the region of 50 dollars per barrel or even lower. I must say that now completely exclude such an outcome is impossible. Earlier, Iraq received comments on the subject, that the country should be exempt from participating in the freeze.

In addition, short-term dynamics of the energy carrier can provide data on the impact of commercial stocks by EIA, as well as news from the US.

Currency market

There is no doubt the fact that the statistics from the US and the decision of the US regulator’s monetary policy, or rather, the accompanying comments will contribute to the dynamics of the major pairs. The aggressive attitude of the Fed could put pressure on the British pound, causing him to check the strength of formed a short term “bottom“. However, next week will announce its decision and the Bank of England.

Judging by recent comments Mark Carney that there are opportunities border control to curb the growth of price pressure, we can assume that with high probability the Bank will leave its monetary policy unchanged. And the move will be able to provoke a fixation of the profits on short positions, which will allow the pair GBP / USD to develop another correction wave to the level of 1.2300. Especially because the GDP data for the 3rd quarter were stronger than forecast.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

The dollar can to lose positions. The forecast for the week 10 – 14 October

The forecast for the week 10 – 14 October

Stock market

On the dollar I felt confident enough to round up the week as macro data and comments from the US Federal Reserve gave reason to expect a rate hike soon. Against this background, stock indices showed a decline. I must say that even a weak data on the labor market could not reverse the situation.

The new week could bring the desired indices catalysts for growth. On Wednesday, September will be published minutes of the meeting. Even a little hint of insufficiently aggressive attitude control may be enough to index resumed growth. If Friday is also a report on retail sales will reflect the fall instead of rising 0.6%, the chances of increasing the Fed may be reduced, which will support the benchmarks.

In this case, the S & P 500 (ES) can aim at a return to the level of 2180.00. Dow Jones (YM) will be waiting at around 18,360 with a further target at 18,500.

Commodity and raw market

Oil noted 4-month highs. Taking into account the fact that according to Bloomberg, OPEC will meet next week to discuss the issue of the distribution of the reduction of production quotas at the energy source has the potential for further growth. An additional factor in favor of the increase of quotations may be, and the weakness of the dollar in the event of a mild mood Fed.

However, relatively high oil prices trigger increased activity of slate companies that could potentially lead to an increase in supply. In addition, as always, attention should be paid to data from the US Department of Energy. If the report is 6 weeks after the fall reflect gains, Brent (BRN), which at the moment looks a bit overbought, may develop in the correct area of the level of 50.00. But so far there are no grounds for a more impressive fall. Thus, the range of variation may be restricted to levels of 50.00 – 53.00.

Currency market

This week the tone for trading in high it will set the mood for the dollar. As shown by the data on the labor market, while talking about the unconditional restoration of the American economy prematurely. This means that, despite all the attempts of the US Federal Reserve to convince the market ready to raise the rate in the near future, the market may be in doubt, although at this stage the probability of the December increase of 70.2%.

Thus, in many respects the situation will determine precisely the tone of the Protocol September meeting and reports on retail sales and consumer confidence in the United States. And comments Yellen on Friday. If the puncture is indicative of “pigeon” attitude of the Federal Reserve, the reports do not make it to the predicted values, and Yellen will not give any clear guidance on the dollar could be an outsider foreign exchange market. Against this background, the pair USD / JPY may take aim at a return to the district level 102,00.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.