News background and trading ideas for 24/10/2018

Today, the most interesting in the foreign exchange market will take place in pairs with the Canadian dollar. The reason is the announcement of the decision of the Bank of Canada in relation to the parameters of the monetary policy. As expected (the probability of about 70-80%) the rate will be increased by 0.25%. In this case, it is reasonable for the Canadian dollar growth. Otherwise (if the rate is not raised) the CAD will certainly be sold out. Actually, the trading plan is to sell a pair of USDCAD, if the interest rate is being raised, to buy it in double volums if it is left unchanged. Although the chances of the second scenario are low, it is still likely if we consider the latest inflation data of Canada, released last Friday and showed a decline in consumer price growth in the country. So, we see an excellent opportunity to make some money in the foreign exchange this afternoon.

Besides, it’s worth drawing attention to statistics on business activity indices in the Eurozone and Germany, as well as the USA. Some unrest in the markets may cause speeches of the Fed officials and the publication of the Fed economic review (the so-called “Beige” book).

Trump continues to force the issue of further tax easing. What definitely plays into the hands of the dollar. Do not forget also about Friday’s data on US GDP, which can well trigger dollar purchases on all fronts, unless, they do not disappoint. We will discuss the data on US GDP in more detail in tomorrow's review.

Among other events, it’s worth mentioning the oil’s achievement of monthly lows. What is happening in the oil market is fully in line with our forecasts and estimates. Recall, we recommend long-term sales of oil. Yesterday Saudi Arabia pledged to increase the oil production as much as the supply on the oil market decreases due to the US sanctions against Iran. Apparently, the murder of the journalist gave the United States the necessary trump card, and they were able to "push through" the Saudis and force them to turn the oil tap in the right direction. Since Saudi Arabia is more than 10% of the oil market, everything is very serious and for a long time. So we continue to recommend oil sales. And yet we continue to monitor the development of events.

Among other our trading ideas we cannot fail to mention the success of our recommendation for buying gold, which yesterday showed significant growth.

Do not either forget to sell the Russian ruble and buy a British pound.