News background and trading ideas for 17/10/2018

Wednesday promises to be quite an eventful day on financial markets. But before we run the forecasts, let’s analyze what is for yesterday was remembered.

Statistics on the UK labor market turned out to be mixed. If unemployment (the minimum over the last few decades) and average wages (growing at maximum rates since 2009) can be attributed to the asset of the British economy when employment (- 5 000 with a forecast of + 15 000) and unemployment requirements (+ 18 500 for September compared with +14 200 for the August) - is a liability. Nevertheless, the pound increased from the day. The reason is generally the same one - the markets are gradually discounted up to the success of the Brexit negotiations accordingly the pound is being bought despite weak macroeconomic data.

Recall, the Brexit talks start today, which can be finalized by the conclusion of the treaty already this week. So we continue monitoring the negotiations and buying the pound.

One more topic, which in last few days excites investors and traders, especially of the oil market - situation around the journalist killing by Saudi Arabia in its embassy. To reassure: the world is not ending. The following scenario emerges in Saudi Arabia’s position: yes, we killed, but not intentionally, in fact, he died himself, but we are also a little guilty, so we will find and punish the perpetrators. That is, decency will be observed, and no sanctions and counter-sanctions are foreseen. So you can exhale and return to sales of oil, and the Russian ruble at the same time.

An important event of today's day will be the publication of the minutes of the last FOMC meeting. Considering how the markets tensed due to further increases in the Fed's rates, the best option for relieving tension in financial markets would be the pigeon tone of the protocols.

Another remarkable moment connects with the dollar. In summary the first fiscal Trump’s year, experts puzzled about the sharp growth of the budget deficit, which riched the maximum since the 2012 rate and is targeting, in general, to the milestone in $1 trillion. It is entirely possible that this is the first swallow in switching markets to the dollar sales mode due to the so-called 3 “D” US economies: government debt, budget deficit, trade balance deficit. So we do not exclude the rapid formation of a downtrend in the dollar. But let's see if the markets pick up this touchstone or not.