News background and trading ideas for 15/10/2018

15 oct. 2018

Last week was exclusively turbulent: the most substantial fall in the US stock market since February this year, oil lost in the value as much as it did since May. Cryptocurrency is also marked by one of the most substantial falls; gold has left a range that has been hatched for several months, the index of fear VIX at the maximum marks since summer.
Trading in such circumstances is difficult because a sharp volatility growth significantly increases the mistake cost. Nevertheless, we keep an eye on things, keeping our readers informed about the most critical events and correcting trading ideas according to the market realities.

The current week promise is not easy either. The main event of the week - EU summit, where the Brexit destiny should be written. In this light, let's remind once again our basis trading idea: buying the pond owing to it undervaluation. The pound’s undervaluation - the result of an incorrect assessment of the outcome of the Brexit negotiations by markets and incorrect positioning by the pound. Recall that in the spring, when it seemed that the Brexit talks were close to completion, the pound against the dollar was worth 1.41-1.43. That is, it is its fair price provided the conclusion of the treaty. Now the pound is only 1.31. That is, if the agreement is still concluded, the pound has every chance to return to the area of 1.41-1.43, and this is about 1000 points from current prices. Since we are confident that the deal will be concluded, we strongly recommend buying the pound more than a month, since we consider this one of the most promising deals of the fall in the foreign exchange market.

Besides, the minutes of the last FOMC meeting will be published this week on Wednesday. Recall the markets are now very concerned about the potential consequences for global financial markets from tightening the monetary policy of the Fed. Therefore, any weakening of texts by the Fed can significantly reduce tensions in financial markets. As it was last week, when data on consumer inflation in the United States were published, which turned out to be somewhat weaker than forecasts.

At the end of the week, we recommend taking a look at the data block on the Chinese economy. The state of the economy of this country largely determines global trends. Therefore, the markets will closely monitor the figures for GDP, retail sales in China.

As for today, it’s worth paying attention to the statistics on retail sales in the United States.

Our current trading ideas are as follow: sales of oil and Russian ruble, the purchase the gold and British pound.