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

By | October 30, 2016

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.

Share on FacebookShare on Google+Tweet about this on Twitter

Leave a Reply

Your email address will not be published. Required fields are marked *