The quotations of the euro-dollar pair rose on Monday and reached the mark of 1.1685.
The updated data on inflation in the Eurozone in August remained unchanged, the basic index of consumer prices is still strengthening by 1% year-on-year, which is significantly inferior to the ECB target. Last week, the European regulator confirmed that interest rates will remain low for a long time, and if the rate of inflation does not increase, the ECB reserves the possibility to resume the program of quantitative easing and December 2018.
The main event in the currency markets remains the trade confrontation between the United States and China. On Monday, it was reported that China plans to abandon a new round of talks if the U.S. continues to push for new tariffs of 10% on Chinese imports of $200 billion. The entry into force of the new duties could occur from day to day, with China undoubtedly taking a number of retaliatory measures, which could lead to more significant market unrest. Meanwhile, China’s stock market fell to a 2014 low amid a possible trade standoff with the United States.
The euro-dollar pair adjusted upwards and retreated from the lower boundary of the wide range at 1.1560. However, in the short term, expectations of two interest rate hikes in the Us before the end of the year will limit the recovery of the pair and allow the quotes to re-test the strong support level of 1.1560.
In our forecast for Tuesday, we expect the euro dollar to decline to support levels of 1.1660, 1.1640 and 1.1610.
Forex. Pound/dollar currency pair forecast (GBP/USD)
The quotations of the British currency rose against the US, the pound/dollar pair overcame the resistance level of 1.3100 and reached the level of 1.3150 by the end of the trading session on Monday.
British Prime Minister Theresa May said in an interview on Monday that the country’s parliament will support a future cooperation agreement with the European Union after March 2019. At the moment, May faces serious opposition to her chosen course. A number of MPs believe that any version of Brexit, other than a hard one, will negatively affect the independence of the UK. Unfortunately, populism has traditionally been a win-win option for political scores around the world, so May will have to contend not only with external opponents in the EU who stand up for their interests, but also with domestic ones. Michel Barnier, the EU’s chief Brexit spokesman, has previously called the key provisions of the UK’s proposal unacceptable because they do not suit the EU. The European Union is not ready to accept the idea of creating a new customs trade zone between the two countries. According to the EU, the UK cannot enjoy the same privileges as the eurozone countries.
A hard Brexit would result in significant economic and financial losses for the UK. This was previously officially stated by the Bank of England, and yesterday this opinion was expressed in the report of the International Monetary Fund. European banks will be forced to withdraw some of their capital from the UK in order to comply with the rules set for branches in non-EU countries. A number of companies could also cut or even close their UK offices in the event of Brexit without a trade deal with the EU. All of this could lead to an even stronger negative impact on the British economy.
In our forecast for today we expect a decrease in the quotations of the pound/dollar to the support levels of 1.3130, 1.3110 and 1.3080.
Forex. Gold price forecast
Gold prices rose during Monday’s trading session and reached a key level of $1,200 per troy ounce by the end of the day.
News interventions have become increasingly popular with the U.S. and China as the two largest economies develop a trade conflict. On Monday, it was reported that China would respond to any U.S. action in a similar way. As early as this week, Donald Trump could impose duties on Chinese imports worth $200 billion. In response to previous tariffs of 50 billion, China immediately responded by introducing exactly the same measures. About the same thing can happen this time, which will lead to structural changes in all world trade.
On the eve of the decade of the global crisis, which occurred in 2008 and led to a sharp rise in the price of gold, many experts draw a parallel with the current situation. According to many, U.S. stock markets are significantly overheated and in the near future there will be a tough correction. The currency crises of a number of developing countries are the first sign of a possible global crisis that will occur no later than 2019. In this case, we will again be able to see a significant increase in gold to the levels of 1400 and 1500 dollars per ounce.
In our forecast for Tuesday we expect further strengthening of gold quotations to resistance levels of 1202, 1205 and 1207 dollars per troy ounce.
Forex. North American Oil Forecast (WTI)
WTI crude oil prices were little changed at the end of Monday’s trading session, falling slightly to $68.80 per barrel by the end of the day.
According to the forecast of the Energy Information Administration, U.S. shale oil production in October 2018 will increase by 79,000 barrels per day compared to September to 7.594 million barrels. barrels per day. The increase in the number of unfinished wells in the u.S. regions in August by 3% will allow to increase the volume of shale oil production quickly enough with prices rising.
Russian Energy Minister Alexander Novak said yesterday that at the upcoming meeting in Algeria, OPEC could discuss the possibility of increasing production by more than a million barrels per day, according to the agreements reached in June. In November, the U.S. imposes sanctions on all importers of Iranian oil, expected a sharp reduction in the volume of their supplies to that country, which can lead to a significant increase in prices. Saudi Arabia and Russia are interested to use this situation to their advantage, so already now actively offer OPEC to increase production and fully compensate for the possible shortage of oil supply on the world market.
In our forecast for today we expect a slight increase in WTI oil quotations to resistance levels of 69.00, 69.25 and 69.50 dollars per barrel.
Forex. Cryptocurrency forecast
Cryptocurrency quotations fell again during Monday’s trading session. The price of bitcoin reached $6,250 and ethereum fell to $190.
On Monday, the developers of the tezos blockchain protocol announced the launch of the main network of the project. Tezos is positioned as a network protocol for secure and time-tested smart contract systems. The first version of the software was launched at the end of June. After that, tezos project tokens appeared on some exchanges. However, only last weekend the developers announced the completion of the experimental mode and the release of the beta. In anticipation of the launch of the main network, Tezos has shown significant growth, especially against the rest of the declining cryptocurrencies. Over the past 24 hours, the price of THE XT has increased by more than 5%, and for the week by more than 32%. At the moment, the rate of THE XT is $1.63.
According to a recently published patent application, Mastercard plans to use blockchain technology to store customer payments. The statement also notes that the blockchain can simplify account management, by facilitating the process of registering and tracking purchase orders. Blockchain can also make it easier to track purchases on multi-service platforms. Mastercard has already received a number of patents related to blockchain technology. Another sign pointing to the company’s interest in the technology is the previously announced intention of Mastercard representatives to hire more blockchain specialists.
In our forecast for Tuesday, we expect the growth of bitcoin quotes to resistance levels of 6300, 6350 and 6400 dollars, as well as the restoration of ethereum to the marks 195, 200 and 210 dollars.