News background and trading ideas for the week:17-21.09.2018

While in Asia and USA come to their senses and calculate losses after hurricanes and typhoons, we will analyze the most anticipated events of the current week and pay attention to the most interesting trading ideas in our opinion.
Nothing super-ordinary is planned for the week, but there are still some events are of interest.

Trade wars do not even think to calm down and it seems that the issue with the new f tariffs for $ 200 billion has already been solved. And this means that so far everything will go as it goes. Emerging markets will suffer, their currencies too, and US dollar will feel relatively good. But not everywhere.

Negotiations on NAFTA will resume this week. As expected, the agreement can be reached on Thursday. What does it mean? Read our comments on the trading ideas in the USDCAD pair.

The main event of the week is the announcement of the results of the meeting of the Bank of Japan on Wednesday. If there will be no surprises, then everything will remain unchanged. But if the Bank of Japan suddenly bursts out with something sensational, then an explosion of volatility in yen pairs can not be avoided. Accordingly, you can try to make money on this. Since the movement in this case will be strong and one-sided, you can set pending orders such as “buy stop” and “sell stop”.

Also, there is a large amount of statistics for the UK, which will draw attention to the pound. And it is quite possible to facilitate its purchases. More details on what to do with the British pound, see below.
Our choice of positions for trade so far without any changes:

1. Buy the British pound - our conviction that the Brexit deal will be concluded, but the current pound prices consider the option without a deal. That is, the pound is highly undervalued (in case of an agreement). In addition, in the last couple of weeks, the statistics on the UK economy has been very encouraging: the GDP growth is higher than expected, unemployment is at the lowest level for the past 40-plus years, and the Bank of England is behaving rather aggressively, at least in words (recall at the end of the last meeting, Bank of England stated that BREXIT without a deal would be the reason for the Central Bank to raise the rate again). So, our recommendation - search for points for purchases, medium-term goals extend to 1.41-1.43.

2. Sell USDCAD - the reason is again our conviction that a deal on NAFTA will be concluded. And current prices reflect rather fears of no-deal case. That is, the Canadian dollar looks undervalued relative to the US dollar. You can sell both around 1.3050, and higher, for example, 1.3150 (if the pair will give this possibility of course). The minimum target is 1.2880, but it is possible for the pair to go deeper to 1.2680 and even lower.

3. Sell the Russian ruble - the Russian Federation Central Bank's rate hike of 25 basis points on last Friday is a formally positive signal for the ruble. But we view this event solely as an opportunity to sell the ruble more expensively. The Central Bank behaves quite inconsistently, which means that there is no strategy for action. Situational reactions of the Central Bank are just an attempt to extinguish a fire. But the "building" is already in flame. So, we recommend buying USDRUB from the currents. The minimum targets are around 70-71. But it is better to take a medium-term position, then everything can be much more interesting in terms of profitability.

We will continue to monitor what is happening in the financial markets and keep you informed.