News background & trading ideas for 11/02/2019

Last week was not marked with anything fundamentally new. The most sensational event for the foreign exchange market became a change of the vector of monetary policy in Australia from the potential tightening to the neutral. The Bank of England has remained parameters of the monetary policy unchanged, however, it substantially lowered the forecasts of the economic growth in Great Britain. But all of that has taken place outside the framework of the campaign for soft Brexit, so there's no cause for alarm. Meanwhile, Theresa May hid all over Europe in search of a compromise. She began her journey with Northern Ireland (recall, the question of the border of Northern Ireland is one of the main stumbling blocks), and then moved to Brussels. It's too early to talk about a breakthrough. So far, the parties have agreed to negotiate further.

Actually, the highlight of the last week in terms of price dynamics can be called a sharp increase in cryptocurrency on Friday: Bitcoin, Litecoin, Ethereum, and Ripple went up by 5-25%. According to The Independent, the fact that the trading volume of Bitcoin in Venezuela this week reached record levels could contribute to that. Considering that most of the country's financial operations are somehow hampered by the US imposed sanctions, the Venezuelan government might well have tried to use cryptocurrencies for certain transactions.

This week will be very interesting for the UK for another round of debates in the Parliament. So increased volatility in pound’s pairs is quite likely, but do not take it at face value.

Not less exciting might be in the dollar’s pairs. February 15 in the country can begin a new shutdown. At least so far everything is going precisely to this scenario: Trump’s and Dems attitudes remain polar.

The ongoing week will be rich on the macroeconomic statistics. On Monday data on the UK GDP will be published, as well as industrial production, trade balance and a number of other macroeconomic indicators. Data is supposed to be weak, so local sales of the pound are pretty possible, but we continue to recommend mid-term purchases of the pound. The motivation behind this is presented in our previous reviews.

Besides, it’s worth paying attention to the inflation data from the USA on Wednesday, GDP of the Eurozone and retail sales in the US on Thursday, as well as retail sales in the UK and industrial production in the US on Friday.

This week we start with the following trading preference: looking for points for the intraday dollar’s sales, buying gold, selling the Russian ruble.

The dollar can be sold versus the euro (buying EURUSD at 1.1310, stops below 1.1250, profits at 1.1420) or against the yen (selling USDJPY about 110.00, with stops above 110.40 and profits at 108.90 ).

As for gold purchases, the trading plan is the same as the one that gave us the opportunity to make good money last week: buy below 1310, add about 1295. Set minimum profits in the area of 1320, and place the stops below 1290. While the asset is above 1294, we see no threat for long positions. Recall that when it comes to intraday positions, it is desirable to close it at the end of the day.

Turning to oil, technically, within the day, it needs to be sold (the guidance for us is 53.50 for the WTI brand — if the price is below the mark, we are looking for points for sales, if it is higher, we are looking for points for purchases). But a level of 53.50 last week was thoroughly blurred, so the situation with oil within the day generally unclear.