Encouraging data, ECB and OPEC + meeting

4 giu 2020

The main event of yesterday was the US employment figures from ADP: -2.7 million against the forecast of -9 million and the past value of -20 million - this is definitely a positive surprise. It is important as a signal on the eve of the main block of statistics on the US labor market, which will be published on Friday. So yesterday, the growth of the US stock market is perhaps the first time in the last couple of weeks, when we have no serious complaints in terms of common sense. On the other hand, factory orders fell by 13%, which is not a cause for joy. The PMI and ISM indices, although they were slightly better than forecasts, are generally quite depressing. That is why current prices in the US stock market for us is solely an occasion for sales.

Today, European markets may well get another reason for optimism. It is about the ECB meeting and market expectations. Recall, investors are waiting for the expansion of the quantitative easing program by another 500 billion euros. This is a very serious amount, which can push the European stock markets up and give rise to the euro.

Returning to the events of yesterday. Statistics on unemployment in Europe and Germany, as well as business activity indexes in Europe, were not a failure. In this light, the continued growth of the euro looked quite logical and expected.

In the oil market, all attention is focused on the online meeting of OPEC + (is expected today). If the decrease in production by 9.7 million bpd is extended for at least another couple of months, oil will receive an excellent opportunity for further growth. Otherwise, in our opinion, the fixation of profits in oil cannot be avoided, and the correction in the oil market will become almost inevitable. According to incoming information, Saudi Arabia and Russia reached an agreement to extend the current volume of decline for at least another month. But at the same time, there are serious claims against a number of countries that did not comply with the terms of the transaction. Today, most likely there will be more news on these issues, so volatility in the oil market is expected to be increased.

As for our trading preferences, the dollar is still under pressure, so more or less significant dollar growth for us is a sell opportunity. But, on the other hand, paired with the Australian dollar or pound, we will use its decline as an occasion for purchases. For example, we will sell GBPUSD near 1.26. At the same time, we are not going to impose our will on the markets, and put up fairly small stops with options for even entering opposite positions upon taking levels (if that will be, of course).