News background and trading ideas for 19/10/2018

For the UK in general and particularly for the pound the current week is not going well. Negotiations obviously postpone to November (or even December). Macroeconomic statistics are so-so (yesterday's retail sales data seriously disappointed: -0.8% m/m with a forecast of 0.4% m/m). As a result, the pound is under pressure. Nevertheless, current prices - are a reason for purchases, not sales.

The highlight news of yesterday was information that ECB could start a cycle of rate hike already in the 4th quarter of 2019. Strategically, this is quite a strong bullish signal for the euro. But so far, the currency is under pressure. One of the negative factors for the euro is the situation with Italy and its budget deficit.

Today is very rich for important economic statistics. The day has started with data on China. The key GDP indicator was worse than expected (+6.5% y/y with a forecast of +6.6% y/y), as was industrial production (+5.8% y/y with a forecast +6.0% y/y). Despite the fact, that the figures for retail sales somewhat sweetened the pill (+9.2% y/y, with a forecast of +9.0% y/y). Generally, statistics confirm the market's concerns about the slowdown in China’s economy and the role of the US trade wars in this.

Eventually, the gold is growing, which again suits our expectations. Purchases of gold, we recall, in our focus this week from the beginning.

Stock markets continue to crumble (for example, China’s stock market has already lost about $ 3 trillion of capitalization since the beginning of the year) and the situation is generally very unpleasant for buyers: on the one hand, the Fed continues to maintain a path of rate hike and, on the other, the engine of the global economy starts to slow down.

Today will be released the important statistics on Canada. We are talking about consumer inflation and data on retail sales in Canada. The first indicator is extremely important for the Canadian dollar, since it may well give an answer as to whether the Bank of Canada will continue to increase rates in the foreseeable future. The question is particularly relevant since already on the next week the Central Bank will have to announce its decision on interest rates. Our position in this regard is the sale of USDCAD, as we are looking for quite good data, especially inflation. Their output above forecasts will be a strong bullish signal for the Canadian dollar. Well, another argument for selling USDCAD - the Canadian dollar did not work out excellent statistics on the labor market of Canada, which was published a week earlier.

Oil continues to decline entirely according to our forecasts and recommendations. At the same time, in our opinion, this is only the beginning of a big move. So we continue to recommend oil sales. Well, do not forget about the Russian ruble, which is also worth selling.