Forex. Euro/dollar forecast (EUR/USD)
In Friday’s trading, the euro/dollar pair fell slightly to 1.1383 on the back of positive US reporting, which gave impetus to the growth of the US currency.
Data from the U.S. significantly supported the dollar. According to U.S. reports released Friday, unemployment remained at 3.7 percent in October and non-farm jobs rose 250,000 to 193,000.
U.S. wage growth hit nine-year highs, with average hourly wages up 0.2 percent in October and 3.1 percent from the same period last year. These statistics coincided with the market forecasts, and therefore contributed to the growth of the dollar.
The U.S. trade deficit was $54 billion at the end of September, while analysts had forecast a negative balance of $53.6 billion. Thus, the U.S. trade deficit reached its highest value in 7 months, which, however, did not have a significant impact on the market, because it was compensated by other high indicators.
Macroeconomic indicators in the Eurozone turned out to be mostly negative. Indices of business activity in the manufacturing sector of the Eurozone and Germany were 52.0 and 52.2 respectively, which turned out to be worse than forecasts. However, given that the equilibrium level for this indicator are 50 points, there is still an expansion of production, which does not deprive the euro of prospects.
A positive catalyst for the euro will be the midterm elections to the U.S. Congress on November 6, at which the House of Representatives will be fully re-elected, as well as 33 new members of the Senate. If the Democrats win, Donald Trump will have to find a compromise with the opposition on many issues. The degree of tension will be high in the situation if Democrats take control of the House of Representatives, and Republicans over the Senate, which will negatively affect trade negotiations with China, the failure of the course of which will be a significant factor in the pressure on the Dollar. Thus, the biggest dollar rally in the last two years may come to an end.
In our forecast for Monday, we expect the euro dollar pair to rise and test resistance levels of 1.1400, 1.1425 and 1.1455.
Forex. Pound/dollar currency pair forecast (GBP/USD)
The quotes of the pound-dollar mostly decreased in the cat of the week and the pair at the close of trading was at 1.2960, having regressed from the initial value of 1.3025.
In the first half of the session, the pound remained in an uptrend at one-and-a-half-week highs after positive data on the index of business activity in the construction sector. In the future, the negative dynamics of the British currency was determined by a block of macroeconomic data from the United States, primarily on unemployment and job growth.
On Monday, the movement within the pound/dollar pair will be influenced by the reporting of the Institute for Supply Management in the U.S. services sector, this index shows significant growth since August this year, and therefore is able to support the dollar. Also important is the index of business activity in the UK services sector for October, it is not as stable in positive dynamics as its American counterpart, however, this time analysts predict its growth.
The key driver of the pair’s dynamics continues to be the Brexit negotiations and related events. On Saturday, Leo Varadkar, the Irish prime minister, said That London’s decision to leave the EU was damaging to UK-Ireland relations and was at odds with the foundations of the 1998 Belfast Agreement because it was a factor in the separation. Northern Ireland. News producing political instability reflects the pound in a negative way.
It should be taken into account that the possibility of an interest rate rise as a factor in the strengthening of the pound also depends directly on the Brexit negotiations, as the Bank of England said in a report on Thursday. Therefore, any negative news in the context of Brexit will raise investors’ fears about changes in the monetary policy of the Bank of England and contribute to the pullback of the British currency.
We assume that in today’s trading the pound/dollar pair will show an upward trend in the moderate range and growth to resistance levels of 1.2990, 1.3000 and 1.3025.
Forex. Gold price forecast
At the end of Friday, gold trading opened and closed at the same mark of 1234 dollars per troy ounce of metal. During the trading, the quotes tested the resistance level of 1237 dollars.
The decline in gold at the end of the day is due to the release in the U.S., according to which in October the pace of job creation showed a significant increase, as well as the rate of wage growth. The U.S. currency rose against a basket of major currencies, while the dollar index rose 0.27% to 96.34.
The decline in the gold rate was also affected by the results of American stock trading. Indices in the U.S. rose at the end of last week, in particular, the increase in the S’P500 was 2.3%. On Friday, trading played out positive corporate statements published in the week, so Friday’s release of reports by Exxon Mobil and Alibaba as a whole balanced the market, the shares of the first company rose by 1.28%, and the second fell by 3.66%.
Many analysts predict a correction in the stock market in the coming days due to the lack of company accountability, which could support it. Following the shares will fall the yield of American traders, and against this background is possible to rise gold.
The market is also actively reacting to rumors that the newly elected parliament can stimulate investigations against Trump, and this is fraught with another round of political instability in the United States, against which investors will go into gold as a protective asset.
In Monday’s trading, we expect the gold rate to rise to resistance levels of 1236, 1238 and 1241 dollars per troy ounce.
Forex. North American Oil Forecast (WTI)
Last Friday, the price of WTI crude oil was characterized by a steady downward trend, falling from 63.59 to 63.03 dollars per barrel by the end of trading, thus recording a decline in the value of oil quotes for four consecutive weeks. Over the past week, the price of oil has fallen by 6.6%.
The price of December futures for WTI oil decreased by 0.9%, and the level of closing on the nearest contract reached April lows. The current fall in oil prices is the largest since February this year.
Commodity prices play down the U.S. statement that there may be exceptions to sanctions for certain oil-buying countries from Iran. The list includes Japan, India and South Korea.
The second significant factor remains the widespread increase in oil production. The Russian Federation, the United States and Saudi Arabia have increased significantly in recent years. In addition, the Yemeni authorities have indicated that they intend to resume production in the near future. Overall, OPEC oil production reached two-year highs.
According to Baker Hughes, which became known on Friday, the number of active drilling rigs in the previous week in the U.S. decreased by 1 unit, and now their number is 874. In the previous three weeks, there was an increase in installations. Such a minimal decline in oil production will not have a significant impact on the upcoming trades.
In our forecast we expect a further decline in oil quotations during today’s session to support levels of 62.90, 62.80 and 62.55 dollars per barrel.
Forex. Cryptocurrency forecast
The cryptocurrency market on Friday recovered and showed growth in the moderate range. Bitcoin was trading at an average of $6,400, Ethereum rose to $199 and XRP reported a reversal to $0.4593.
The momentum for XRP growth may be given by the news agenda of Ripple’s expansion eastwards. Speaking at the World Islamic Economic Forum on Friday, Dilip Rao, head of global innovation infrastructure, announced that Ripple intends to establish an office in Dubai in the United Arab Emirates by the end of 2018. This can encourage the company to receive an influx of investors both through a local high-income class interested in financial services and through transfers made by foreigners who have come to work in the UAE.
A negative news agenda for virtual currencies is information about the volumes of exchange trades, published at the end of October by a number of cryptocurrency exchanges. For example, on Hong Kong’s OKEx and Singapore’s Huobi, they were down 47% and at U.S. Poloniex by 56% compared to September. Trading on the leading Binance exchange fell by 32%. Low trading dynamics produce weak exchange rate dynamics, and therefore traders’ expectations regarding market growth may decrease.
On Monday, we expect a slight recovery of cryptocurrencies. Bitcoin will aim for resistance levels of $6500, 6550 and $6590, Ethereum will be worth $204, 206 and $208, and The XRP will try to test the 0.4700, 0.4740 and $0.4780.