Gold continues to grow amid declining interest in risky assets
Forex. Euro/dollar forecast (EUR/USD)
In Wednesday's trading, the euro showed an increase against the dollar from the level of 1.1330 to 1.1345 against the background of the weakening of the US currency, mainly due to concerns about the Fed's soft policy to raise the key rate, lower yields U.S. treasuries and a slump in U.S. stock markets.
On Wednesday, Deputy Italian Prime Minister Luigi Di Maio announced the government's consistent position on introducing basic income for citizens and lowering the retirement age in Italy from 2019. The Italian government plans to introduce a "quota of 100" that effectively lowers the retirement age and allows people to claim a state pension when their age and number of years of service together is 100. Also, according to Di Maio, the government will find a way to prevent sanctions from the EU, not backing down from the provisions laid down in the budget for 2019. This largely stimulated a downward correction within the pair in the middle of trading.
The European stock market fell on Wednesday, reversing a sharp pullback in the U.S. stock market on Tuesday by more than 3 percent amid fears that positive expectations of a truce in the U.S.-China trade standoff were redundant. At the same time, the Italian market showed the smallest decline due to the upcoming budget agreement with the EU. Yesterday's speech by the head of the European Central Bank Mario Draghi did not become support for the euro, as his rhetoric was of a general informational nature and did not contain promises on the further course of the monetary policy of the regulator. At the same time, macroeconomic statistics supported the euro yesterday. The index of business activity in the services sector of the Eurozone at the end of November was 53.4 against the expected 53.1.
In our forecast for Thursday, we assume that the quotes of the euro/dollar pair will resume the downtrend and decrease to the support levels of 1.1310, 1.1290 and 1.1265.
Forex. Pound/dollar currency pair forecast (GBP/USD)
Yesterday, the pound/dollar pair started and ended trading at 1.2730. During the session, the quotes tested the local resistance level of 1.2760.
On Wednesday, it was announced that the European Union is embarking on a formal procedure for signing an agreement on the terms of the UK's withdrawal from the community. The European Council and the European Parliament must now formally authorize the signing of the deal, after which it could come into force on 30 March 2019 if the UK also approves it. Fears of traders ratifying the agreement by the Kingdom were played out by the decline in the pair's quotations.
Published yesterday, the British index of business activity in the services sector in November, caused a downward correction of the pound against the dollar as the actual data turned out to be worse than forecast, the indicator fell from the level of 52.2 in October to the mark 50.4. Analysts assumed that it would remain at the level of the previous reporting period. Thus, the indicator of activity in the non-manufacturing sphere shows a decline for the third month in a row, updating the July lows of 2016 and approaching close to the 50 mark, below the level of which we can talk about a decrease in activity.
From The U.S. macroeconomic statistics, the National Employment Report from ADR, which reflects changes in the number of jobs in the non-agricultural sector, is of interest today. The data is important, primarily because high labor performance may increase the likelihood of the Fed's key rate shifting upwards, which will strengthen the dollar in the long run. This time the number of employed is expected to decrease, to which the US currency may react with a correctional decline against the British.
In our forecast for today, we expect the pair's quotations to decline to support levels of 1.2715, 1.2700 and 1.2665.
Forex. Gold price forecast
Wednesday was a favorable day for gold prices, which rose from the level of 1240 dollars per troy ounce in morning trading to 1243 by the close of the session. The depreciation of the dollar caused prices to rise to the highest level of closure in the last five months.
Along with the widespread recession in the stock markets, investors' expectations for further increase of the key rate of the Fed continue to decline. Even after the December meeting of the regulator, expectations of keeping rates increased to 21.6%, compared to 17.3% a week earlier. As the yield on debt instruments, in particular bonds, rises in the face of rate hikes, doubts about the Fed's policy also have a negative impact on traders. Doubts about the sustainability of U.S.-China trading relations are played out by traders leaving for stable assets. These factors supported gold quotes at yesterday's trading.
Palladium has become a limiter of the growth of the gold exchange rate, the price of which exceeded the value of gold for the first time in 16 years. This interest of traders in palladium is due to the current fears of a possible shortage, given that this metal is indispensable in some sectors of the economy, for example, for the production of car exhaust filtration systems. In addition, yesterday the dollar index reached a five-day high at 96.97, which caused a correctional decline in the gold rate during trading.
In our forecast for today's trading, we expect a decline in gold quotes, possibly testing support levels at 1240, 1238 and 1235 dollars per troy ounce.
Forex. North American Oil Forecast (WTI)
At yesterday's trading, oil quotes, as expected, showed upward dynamics. The price of a barrel of WTI crude oil rose from the level of 52.45 dollars at the beginning of the session to 53.34 at the end of its end and reached the level of local resistance at 54.10 dollars at the end of the session.
Given that negative sentiment prevailed in financial markets as a whole, the growth potential of oil futures was limited. The dollar index showed growth by the end of the day, which also put pressure on the cost of raw materials. The market also played a significant increase in U.S. inventories by 5.36 million barrels according to statistics from the American Petroleum Institute.
Support for oil quotes was yesterday's meeting of the OPEC monitoring committee, which resulted in traders expecting recommendations on the overall level of oil production. In the evening it became known that OPEC ministers agreed on the need to reduce the production of raw materials. Although specific figures were not discussed, producing countries set a lower threshold of 1 million barrels per day, which could be reduced by September or October 2018.
Russia, among others, supported the reduction of production, although there were conflicting rumors around its position. Moscow was reportedly ready to cut production by only 0.14 million barrels per day, while OPEC insists that Russia reduce this figure by 0.25-0.3 million barrels. This situation, coupled with the withdrawal from the cartel of catalonia, caused concern of traders, limiting the growth of the cost of raw materials, and the news of Russia's support for the rate of decline gave impetus to oil quotes. However, Saudi Arabia's position is not entirely clear, which put pressure on the market yesterday, and is likely to cause concern today.
Supported commodity prices and reports of failures on key oil pipelines from Canada to the United States, TransCanada stopped pumping on the Keystone project, and Enbridge reduced shipments through the Mainline pipeline.
The OPEC meeting will be held on December 6. After that, there will be a full-fledged meeting at the level of OPEC ministers, at which the final decision on oil production in 2019 will be made. The further dynamics of oil prices depend on what its new parameters will be. In the two years of the OPEC format, the verdicts of ministerial meetings have never deviated from the opinion of the monitoring committee. However, it cannot be said that the outcome of the OPEC meetings is always predictable, although traders consider its prospects to be more than positive, against which the cost of raw materials is likely to continue to rise.
In our forecast for today we expect the continuation of the uptrend for WTI crude oil, resistance levels may reach 53.50, 53.80 and 54.30 dollars per barrel.
Forex. Cryptocurrency forecast
On Wednesday, the cryptocurrency market was characterized by another slight decline. Bitcoin dropped from 3921 dollar to 3787 by the end of the trading day. By Wednesday evening, Ethereum had fallen from $108 to $103. XPR on Wednesday morning traded at 0.3504 dollars, and in the evening trading reached the level of 0.3437 dollars.
According to a study by A.T. Kearney, one of the leaders in the consulting services market, by the end of 2019, Bitcoin will regain its previous dominant position in terms of market capitalization, and the catalyst for this, among other things, will be instability of the Altcoins. According to analysts A.T. Kearney, the share of the benchmark cryptocurrency by the fourth quarter of 2019 will again account for two-thirds of the capitalization of the digital asset market. Altcoins are losing their appeal due to the increasing reluctance of investors to carry out risky operations. The company also forecasts a softening of the position of financial regulators in relation to the cryptocurrency sector. This can be the beginning for the launch of Bitcoin-ETF and attract a significant number of large investors to the market, which will positively affect the exchange rate of Bitcoin and other cryptocurrencies.
To the above there are certain prerequisites, in particular, at the g-20 meeting this weekend, world leaders agreed to introduce global regulations on cryptocurrencies. The main leitmotif of the document published on the results of the summit is the spread of anti-money laundering procedures. However, the very fact that the issues of the cryptocurrency industry were discussed on a par with other global problems and trends demonstrates its social and economic importance, which was played out by the uptrend of the market at the beginning of the week.
At the moment, the Bitcoin dominance index is 54%, although as of January 2017 this indicator was about 88%. But by January 2018, Bitcoin's market share had fallen below 33%, and then rose again. To date, the total capitalization of the virtual asset market has approached 125 billion dollars, of which part of Bitcoin is estimated at 67.5 billion dollars.
We assume that in today's trading the movement of cryptocurrencies will be limited to the lateral range with moderate upward dynamics. Bitcoin can target resistance levels of $3,960, $4,040 and $4,100. Resistance levels of 108, 111 and $155 are likely for Ethereum. XPR can test resistance levels of 0.3520, 0.3560 and $0.3610.