News background & trading ideas for 04/02/2019

Last week turned out to be not very prosperous for the dollar. The reason was the Fed attitude. The Central Bank has put the interest rate on hold and demonstrated quite a dovish sentiments in general. Even excellent NFP figures did not help the dollar (+304K with a prediction in +165K, and recall we were expected even worse numbers). The thing is, that statistics on the labor market includes not only the figures of the NFP but also the wages dynamics and unemployment rate. And its just let down. Unemployment turned out to be higher than forecast (4%, while the market expected figures to be 3.9%), and the average hourly wage showed an increase of only 0.1%, while the estimate was +0.3%. We believe that precisely the last figure did not give the dollar an opportunity to win back losses on Friday. For the Fed, salary growth is one of the primary inflation indicators. Accordingly, a sharp slowdown in inflationary processes is a sign for the Central Bank that the decision not to raise the rate was right, and the cause for not raising the rate in the future.

So, despite spectacular NFP data, we continue to deem the dollar as vulnerable and recommend looking for points for its sales this week.

Besides, the candidates for purchases this week are commodity assets of both gold and oil. Gold has not yet reached the goal of the current upward movement (we are waiting for growth to the area of 1350), and amid a weakening dollar and dovish Fed position, there are all chances for further asset increase.

As for oil, after the asset managed to take hold above 53.50 (WTI brand), the path to further growth is open, and there is no point in standing aside - you need to earn. The reason for the intensification of buyers was the data from Baker Hughes that the number of oil rigs in the United States dropped sharply to its lows in 8 months (the number of oil rigs decreased by 15 to 847 pieces). While noting that buying this week intraday, we continue holding mid-term positions on oil for sale.

This week promises to be relatively calm after very intensive previous ones. The highlight of the week will be an announcement of outcomes of the Bank of England meeting on Thursday.

Today in terms of macroeconomic statistics is of little interest, so it makes sense to continue to trade within current trends.