Last week outcome and current market statement

7 ott 2019

ISM Manufacturing Index report announced on Tuesday was the main event last week. Recall, the Index fell to its lowest level since June 2009 - 47.8 points (below 50 means decrease inactivity). As a result, the dollar has undergone the most massive one-day sales over the last month.

However, the sale did not receive further development. The markets were waiting for the statistics on the NFP (unemployment fell to 3.5%, which is a record low for the past few decades. NFP figures are close enough to the forecasts and market expectations. Nevertheless, the dynamics can be traced more clearly (downward trend). So after Friday’s data to come out, the Fed has untied its hands to reduce rates in October (currently the markets estimate the probability at 76%). We also note that lower wage growth is also another enable signal to lower the interest rate.

So, our position as for the dollar has not changed, but rather strengthened. We will continue to look for points for its sales across the entire spectrum of the foreign exchange market. Moreover, the US has not only economic but also political problems. The beginning of the impeachment procedure, regardless of its outcomes, is a negative signal for the US dollar.

As for the upcoming week, it will be relatively calm on Wednesday, the markets will look through the minutes of the last FOMC meeting, on Thursday data on the UK economy (GDP, industrial production), as well as inflation in the USA, on Friday, attention will be focused on statistics on the Canadian labour market, as well as consumer sentiment in the USA.

Of our other preferences, we note the purchase of gold, as well as the Japanese yen. According to analysts at JPMorgan Chase, the 4th quarter in the last 10 years is the most unfortunate period for the Japanese yen. So do not forget about the stops and control the volume of entry.

In the oil market last week, everything was following our forecasts. Goal 51.20 has been achieved. After that, the bears recorded profits on Friday. It is still difficult to say whether this fixation will turn into a full-fledged correction. So we will spend the beginning of the week neutral regarding oil - we will observe how events will develop and we will monitor the news background.