Forex. Euro/dollar forecast (EUR/USD)
The week from October 15 to 19 was difficult for the single European currency. In Monday's trading, the euro/dollar pair rose to a strong resistance level of 1.1580. Tuesday was marked by an excess of the level of 1.1600, but subsequently there was a pullback to 1.1575. On Wednesday and Thursday, the pair returned to the downtrend, having been at 1.1500 by the end of Thursday. On Friday, there was a reversal of the rate of quotations upwards, replaced by a slight pullback back to the end of the trading session to 1.1510.
Next week, the euro will also be positively affected by the growth of Asian stock markets. On October 19, positive statistics were published in terms of retail sales of consumer goods and capital investments in China – they grew by 9.2% and 5.4% respectively, in both cases exceeding the forecastvalues. Despite the fact that Chinese GDP decreased by 0.1%, it did not have a negative impact on the market, a slight decrease in growth was expected and laid in the quotes. Positive dynamics in terms of retail sales and capital investments were not expected, and given that these indicators are the driver of GDP growth next month, China's position in the market will strengthen. In turn, China's economic growth will be a positive factor for the euro, as the dynamics of the European currency is inextricably linked with the state of affairs in China.
"Italian theme" remains one of the main in the currency markets and is a key factor in the euro's depreciation. There are disagreements about the Italian budget. Brussels believes that its structural deficit will continue to increase and will lead to an increase in public debt. This is fundamentally disagreed with in Rome. On Monday, the Italian Finance Ministry is expected to respond to a letter from the EU authorities on the budget issue. In addition, Italian banks are very closely linked to European banks, and the European Central Bank is the largest holder of Italian bonds – with the spread between Italian and some European bonds significantly increased. Therefore, in the event of a full-blown crisis, its effects would affect the entire European financial sector, and it was not yet clear how strong it was.
Monetary policy of the Federal Reserve, coupled with the monetary measures of the European Central Bank, worsenthe positions of the euro. The ECB, according to Friday's statement of the member of the Board of Governors Ren, will start raising interest rates in the Eurozone at the end of 2019. Deposit rates will be positive by September 2020. By this time, the rate in the federal funds, according to statements of Fed officials and minutes published this week, will grow to 3.25%, and the gap between it and the European refinancing rate – to 3% from the current 2.25%. This will be a significant factor in the depreciation of the euro, which can manifest itself in the short term. Over the past week, the European stock market has grown by 0.6%, despite Friday's decline of 0.12%, associated with the "Italian issue". The U.S. stock market in the coming week will cease to be a supporting factor for the dollar.
Of the significant events expected next week, the euro exchange rate may be affected by the publication of the producer price index in Germany and the index of consumer confidence in the Eurozone on Tuesday, which is likely to grow stronger than forecasts. On Thursday, the main event of the week will be held – a meeting of the monetary committee of the European Central Bank, the publication of a decision on the refinancing rate in the Eurozone and a press conference of the head of the ECB Mario Draghi. A survey from professional forecasters on macroeconomic indicators in the Eurozone on Friday, prepared by the ECB, is able to orient investors in the conditions of market uncertainty.
At the moment, the downtrend of the euro prevails, the power of which can add negative news on the Italian crisis. If at the beginning of the week the support level in the region of 1.1470 is broken, then the rate of decline will prevail throughout the trading week. If this does not happen, the European currency can win back some of the positions lost over the past week. Projected support levels are 1.1490, 1.1470, 1.1440, 1.1420, 1.1400.
Forex. Pound/dollar currency pair forecast (GBP/USD)
The pound/dollar pair last week showed considerable volatility against a volatile news background.
The week was again under the sign of Brexit and again no clarity has emerged. As early as Monday, the parties' optimistic statements about the possibility of reaching a trade agreement and resolving the issue with the Irish border gave way to uncertainty, to which the pound did not hesitate to react with the fall. In Tuesday's trading, the British currency showed growth against the dollar and was trading at 1.3220 in anticipation of the outcome of the Brexit summit. On Wednesday, the pound/dollar pair fell by 0.4% to 1.3110, which was due to the cancellation of the summit. At the end of the week, the pound continued its peak, an attempt to exit on Friday after three rises followed by rebounds, it was trading with an average value of 1.3050. The status of the Irish border continues to be a major unresolved issue for EU and UK negotiators.
In addition, British Prime Minister Theresa May has faced internal resistance over Brexit, both from Labour mps, conservatives and cabinet ministers. Theresa May's failure to complete a deal with the EU by the end of the year could bring the country closer to leaving the European Union without any Brexit deal at all. Northern Ireland's Democratic Unionist Party chief Arlene Foster has said she will oppose any Brexit deal with the EU in which Northern Ireland leaves the EU on terms other than the rest of the UK Kingdom. Opposition from the Northern Irish party could jeopardise May's position as British prime minister. Because for a successful Brexit deal through Parliament, Theresa May needs the support of a majority that she may not get in recent events.
The dynamics within the currency pair will continue to be influenced by the trade war between the United States and China, marked by new events. On Friday, October 19, China filed a complaint against the United States with the World Trade Organization. In addition to China, EU countries have joined the camp of states protesting similarly against the Trump administration's introduction of import tariffs on metals such as steel and aluminum. Complaints will be considered at the scheduled meeting of the WTO on October 29, but within the next week this circumstance, given the number of dissatisfied countries, will affect the growth of the dollar.
On October 23, Andy Haldane, a member of the Bank of England's Monetary Policy Committee, is expected to speak on financial stability and market risks, as well as monetary aspects, his speeches give investors an understanding of the Position of the Bank of England and follow-up. On the same day, the head of the Bank of England Mark Carney is expected to speak, usually affecting the markets.
Also interesting are the publication of the British industrial order index on Tuesday and the gross volume of approved mortgage loans on Wednesday.
In the coming trading week, the overall negative dynamics for the pound are expected, even if the news on Brexit turns out to be insignificant. In the middle of the week, the dollar may go up again, depending on the indicators of planned reporting, but a sharp fall in the pound is not expected.
Projected support levels for pound/dollar quotes of 1.3035, 1.3015, 1.2980, 1.2940 and 1.2900.
Forex. Gold price forecast
Gold showed the lowest volatility in the trading week from October 15 to 19 compared to previous periods. In trading at the beginning of the week, gold strengthened by 1% and stabilized at 1231 dollars per troy ounce. On Wednesday, gold fell in price to 1222 dollars per ounce, but by the end of the week returned to the level of the beginning of trading on Monday at 1230 dollars.
Gold strengthened in value after the publication of the International Monetary Fund report, according to which the world economy will significantly slow down the growth rate in the current and subsequent years – for investors to invest in traditional assets in conditions macroeconomic instability. The price of gold was not affected by the growth of The U.S. stock markets and the concomitant appreciation of the dollar, which occurred earlier in the week due to the positive quarterly reports of several leading U.S. corporations, in particular Adobe, Ford Motor Company , Morgan Stanley, Goldman Sachs and Netflix, whose financial results exceeded the expectations of market analysts.
The publication of the minutes of the September meeting of the Federal Reserve was also perceived in the gold market without much panic. Contrary to the rhetoric of U.S. President Donald Trump about the Fed's revision of its positions on raising the level of interest rate, the regulator remained adamant, and therefore, taking into account the statements of officials, we should expect a slow and gradual increase and refusal Federal Reserve from stimulus policy. As a rule, the precious metal reacts negatively to such news.
The gold quotes were not affected even by the fact that at least one round of the increase will take place already this year, and the next three are scheduled for 2019. Perhaps the reason for this is the Fed's announced search for a neutral interest rate, it is assumed that it should neither restrain nor stimulate the economy.
The decline in the yield of treasury debt, guaranteed by the U.S. government, has so far ceased to be a significant driver in the gold market,
Next trading week will also bring no unexpected surprises for investors in gold. The dynamics of the rate will remain low, with the possibility of rate fluctuations up in the middle of the week and subsequent return. Possible resistance levels at 1235, 1237, 1240, 1243 and $1,245 per troy ounce
Forex. North American Oil Forecast (WTI)
WTI crude oil prices fell in the last trading week and reached the level of support of 69.70 dollars per barrel.
The volatility of oil prices, which has prevailed in the market over the past two weeks, is due to a number of factors, which are also in constant dynamics. This is the general geopolitical instability, and sanctions against Iran, which are to be imposed on November 4, and problems with production and the world economy, which together gave fertile ground for the fears of oil traders. And they began to accumulate stocks en masse for accompanying speculation.
The situation with Jamal Khashoggi, to which the market reacted at the beginning of last week with a rapid growth of oil quotations, reduced its intensity. On Saturday, October 20, the official version of the Saudi authorities was announced, according to which Khashoggi was accidentally killed during a scuffle at the Saudi Consulate General in Istanbul. Given that U.S. President Donald Trump, during a speech to the military in Arizona, said that he has no doubt about the version presented by Saudi Arabia about the accidental murder of a journalist, Washington has backed down and seeks to avoid confrontation. The reason for this is the fear of the interruption of supplies by Riyadh with the subsequent price boom, and the concentration in the hands of the Kingdom of a significant number of American traders.
Fears of a shortage in the oil market also gradually cease to affect the growth of oil prices. In particular, a week-long report released last Wednesday by the Energy Information Administration of the U.S. Department of Energy showed a significant increase in oil reserves by 6.and a half million barrels, with the U.S. increasing inventories already week four. Moreover, the Energy Information Administration predicted an increase in shale oil production in November of 98,000 barrels per day. In addition, thanks to high oil prices, producers can move drilling rigs and invest in alternative transportation methods, which compensates for the lack of infrastructure for shale oil production.
Another drag is the sell-off in oil from strategic reserves launched by the United States on the eve of the midterm elections to lower its price, which directly affects the price of gasoline for the electorate. At the moment it is planned to sell another 11 million barrels of oil.
The U.S. is trying to smooth the "Iranian factor" in this way, and it seems to be succeeding. Thus, after the statement made on Monday by the U.S. Special Representative for Iran Brian Hook that the U.S. intends to reduce oil exports from Iran to zero, on Tuesday oil quotes showed a decline, which indicates that there is no direct correlation between news from Iran and the dynamics of the oil market.
Despite the fact that China has completely stopped importing U.S. oil, the U.S. still continues to increase exports, while dumping on WTI prices. This indicates a sufficient volume of commercial oil reserves in the United States. China also can not be discounted, Friday's growth of quotations was primarily due to the publication of reports on the growth of demand for hydrocarbons in China.
Thus, at the moment, there are no factors that would be a significant driver of oil price growth or decline. Next week, oil quotes may be affected by the publication of data on crude oil reserves in the United States and Friday's release on the number of operating drilling rigs in the United States as an indicator of the activity of the oil industry.
In the absence of extraordinary news, we anticipate an increase in the price of WTI crude oil at the beginning of the week and their possible pullback after the publication of the American reporting. Resistance levels can reach 70.00, 70.25, 70.50, 70.80 and 71.25 dollars per barrel.
Forex. Cryptocurrency forecast
On Monday, the Bitcoin rate went up sharply, and the cryptocurrency was trading at an average of $7,400 per unit. This is due to the fact that investors began to get rid of Tether after false news about the delisting of USDT exchange Binance and bankruptcy of the servicing Tether Bank, as well as reports of the suspension of the withdrawal of USDT by the Stock Exchange KuCoin, which only temporarily stopped crypto wallet service. After the situation cleared up and the market ceased to be feverish, on the same day there was an equally sharp rollback of the leading cryptocurrency to the level of 6396 dollars. In the future, Bitcoin was traded mainly in flat, and by the end of the week the cryptocurrency reached the mark of 6600 dollars.
At the beginning of the week, Ethereum came close to $212 and held on to that level until Wednesday, periodically testing the support level of $209. On Thursday, Ethereum fell to $206 per unit before returning to $208 on Friday. The XRP/USD pair at the beginning of the week was trading at 0.4788 dollars, as a whole it was characterized by a downtrend and continued correction throughout the trading period with consolidation at 0.4678 by Friday evening.
In general, the situation in the cryptocurrency market has stabilized at the moment after the events of Monday, and virtual currencies react very passively to the news background. The only long-lasting consequence of the impact of the USDT exchange rate on Bitcoin was the imbalance between its value on the bitfinex cryptocurrency exchange and a number of other exchange platforms.
After the Staplecoin rate returned to its base mark of 1 dollar on Friday, the Bitcoin exchange rate on Bitfinex almost equaled the rate on other exchanges. The total market capitalization of USDT at the end of last week decreased by half a billion dollars, but at the moment it does not reflect too much on the bitcoin rate – rather, it generates demand for similar features of coyns, in particular, Paxos Standard and Gemini Dollar. Without any external catalysts like those that prompted Monday's Bitcoin boom, the refraction of the current corrective trend aimed at local decline, with periodic attempts at growth to the upper limits of the correctional range, in the coming week is hardly possible.
Thus, for Bitcoin, we forecast moderate growth at the beginning of the week, a pullback on Tuesday and a flat for the rest of the week with resistance levels of 6620, 6650, 6680, 6700 and 6750 dollars.
For Ethereum, we consider a similar pattern to be highly likely, i.e. growth, not reaching the level of local resistance, further decline and consolidation. Resistance levels will be at $212, 215, 218, $220 and $225.
Ripple is more prone than Bitcoin and Ethereum, with the cryptocurrency likely to recover slightly in the coming week to resistance levels of 0.4755, 0.4785, 0.4800, 0.4830 and 0.4870 dollars.