News background and trading ideas for 18/10/2018

Negotiations between EU and Great Britain this is obviously the main event of Wednesday. Apparently, it could finalize with nothing. Should we give up on the pound’s purchases in this regard? We consider we shouldn’t. We still see this solely as an opportunity for more cheaper purchases. We’ve noticed it many times that parties will wait till the last minute. Moreover until the last hour. What takes place now. Since what is happening to conform to our vision of the situation, there are no reasons to think that it’s wrong.

Many analytics already start to watch ahead of the time for another summit to be held in the next month. That will be this very the last moment and everything will be resolved in November. Anyway, time is short, so there are still chances for the arrangement already this week.

Another important development of Wednesday was the publication of the minutes from the last FOMC meeting. We noted that the markets are extremely sensitive to the issue of raising rates in the United States now. Accordingly, it was extremely important for them to receive from the Fed clarifying clues about when it is planned to pause in the rate increase cycle and a general vision of the situation and the Central Bank strategy. Actually, such reference points were given yesterday. The current plan is to raise the rate until 2020–2021, as a result of which it can rise above neutral levels and even become restrictive for a while. After that, the rate should be reduced to neutral marks. Under the neutral level at the present time, the majority in the Fed assumes a rate of 3%. So the Fed continues to keep its line, which, of course, plays into the hands of the dollar. But the US stock market will continue to remain under pressure.

From other news, it should be noted the development of the situation with Saudi Arabia, which is going according to our forecasts, have voiced earlier. Country recognizes the fact of the death of a journalist but will write it off to the tragic accident and find a couple of perpetrators and punish them. Over this and the condition of the oil market, in general, we continue to recommend the oil sales.

Considering the complete dependence of the Russian economy on oil prices, we continue to recommend the sales of the ruble paired with oil.

Since the overall tension on financial markets subsided a little, the demand for asylum assets appears to have a chance of decline. However, while gold is above 1210, it makes sense to look for points for its purchases.