News background & trading ideas for 30/01/2019

The most significant events yesterday took place in the British Parliament. The pound in general escaped with slight shock. What pound might be afraid of? First of all, that parliamentarians rejected an amendment about the postponement of Brexit terms. The main outcome of yesterday’s events in the Parliament became an understanding that there is a limited number of followers of exit without a deal, which indicates that the compromise will be inevitable, soon or later. So, Theresa May was sent to Brussels to the new round of negotiations. Actually, everything is going accordingly to our scenario. That’s why our recommendation remains unchanged - continue looking for points for pound purchases.

Today promises to be even more intense than yesterday. We are waiting for a block of significant statistics from the US: the ADP report on employment in the private sector (extremely relevant on the eve of Friday data on the US labor market), data on US GDP and last of all, the announcement of the outcomes of the FOMC meeting will end a tough day for the dollar.

We will focus precisely on the last issue. At least on dovish comments from Fed officials, since not many people believe in rate hike today (99% of traders consider the rate will remain unchanged). Besides, there is a big risk of additional signals from the Fed in favor of some easing of monetary policy (we are talking about the parameters for reducing the balance of the Fed). This means that the dollar today may be under very severe pressure. We estimate the likelihood of its sales as high. Consequently, we continue to recommend its sales in the foreign exchange market on all fronts.

Meanwhile, discussions between the US and China continue, and as long as there is no breakthrough or final outcomes, investors will be under of strain, which means that gold purchases (as long as it is above 1298) remain applicable.

Oil, as well as the Russian ruble, is worth selling. The factors that have been supported the Russian ruble in the last couple of weeks (the end of the tax period and the increase in oil prices) stop there. Do not either forget that the Central Bank of the Russian Federation has returned to the market and is actively buying dollars.