Forex. Euro/dollar forecast (EUR/USD)
Yesterday's trading ended with the weakening of the euro/dollar pair. The session began with a rapid growth of the European currency and a breakdown of local resistance at the level of 1.1540. However, immediately after that, the rate sharply went down, dropping to 1.1465.
The fall of the euro is due to the fact that yesterday the debt confrontation between Rome and Brussels entered a new phase. On Monday, the letter of the head of the Italian Finance Ministry Giovanni Tria was published by the European Commission, according to which, the government will take all possible measures to prevent the budget deficit from exceeding the volume of 2.4% in 2019. Tria acknowledged that the expenditure part of the budget was contrary to EU regulations, but he hoped to resolve the issue during the negotiations. Giuseppe Conti, Italy's prime minister, said the 2.4 percent deficit was the highest possible. Recall that the EU authorities said that with such a level of deficit the Italian budget will not be approved at the level of the European Union.
Trading in the bond market can support the euro. The growth of yield swayed Italian bonds, after the rating agencies lowered The sovereign rating of Italy at the weekend to the level of WAA3, but with a stable outlook. German bond yields fell 6 basis points, which is not very favorable for the European currency. In addition, according to the Bundesbank, which became known on Monday, in the third quarter the German economy faced difficulties, which will also not contribute to the growth of the euro.
Of the significant events expected today, the euro exchange rate may be affected by the publication of the producer price index in Germany, where it is possible to exceed the forecast, which may slow down the downward dynamics of the European currency.
Taking into account that the European Union expects the deviation of Italy's budget on Tuesday, it is expected that the downtrend will continue and subsequent fluctuations within the correctioncorridor, with support levels of 1.1455, 1.1430 and 1.1410.
Forex. Pound/dollar currency pair forecast (GBP/USD)
Monday began with the growth of the pound/dollar pair. However, at the mark of 1.3100 there was a sharp pullback and the pair traded on average at the level of 1.2960 by the close of the trading session. Thus, at the end of the day, the quotes decreased by 0.7%.
The pound was weakened by British Prime Minister Theresa May's proposal to extend the transition period in the context of Brexit as an alternative to resolving the issue with the Irish border. The announcement added to the general political instability, as it was also criticised by Theresa May's own party.
A large number of open short positions will have an impact on the dynamics within the pair, with options being used in bets rather than direct indications of the direction of the pound.
Today, andy Haldane, a member of the Bank of England's Monetary Policy Committee, is expected to speak. As he deals with financial stability and market risks, as well as monetary aspects, his speeches give investors an understanding of the Bank of England's position and subsequent actions. Also scheduled for today is the speech of the head of the Bank of England Mark Carney. Interest for the market is also the publication of the British index of industrial orders, which can support the pound, as the volume of the indicator is projected to increase.
At Tuesday's trading, taking into account the Brexit negotiations, the pair will be characterized by a slight downtrend, with a change to an upward correction to the mid-to-end of trading with positive reporting indicators. Support levels are at 1.2950, 1.2935 and 1.2900.
Forex. Gold price forecast
The new working week began with a slight drop in the gold rate to 1222 dollars per troy ounce by the end of trading.
Gold reacted to the growth of futures on the dollar index, which by the end of the day was trading at 95.77, added to the growth compared to Friday more than 0.3%. In addition, the factor of the price decline was the positive statistics on macroeconomic indicators in China, published on Friday, as well as the introduction of stimulus measures announced by Beijing on Monday.
The stable indicators of American reporting, published last week, also made themselves felt. The configuration of these factors has led to the weakening of the position of gold, the deterrent for which are high or rising interest rates as a result of the tightening of monetary policy by central banks.
However, the downtrend is unlikely to be long-lasting. The main benchmark for traders in Trading on Tuesday continues to be fears about the fall of stock markets. Thus, on Monday, the U.S. stock indexes closed with a decline, in particular, the S'P500 lost 11.90 points and closed at 2,755.88.
So far, the gold market, given the rather stable news geopolitical background, is waiting for the reporting on the U.S. GDP, which will sum up the results of the third quarter for the U.S. economy, and the release of which is scheduled for Friday. Data on the U.S. housing market, which will be released Wednesday-Thursday, are also the focus of traders.
Tuesday does not suggest any news agenda that could significantly affect the gold quote spree. Therefore, the correction of the downtrend of Monday in the direction of increase is likely. Projected support levels for gold are $125, $1,228 and $1,230 per troy ounce.
Forex. North American Oil Forecast (WTI)
The price of a barrel of WTI crude oil was $69.54 by the end of the trading session on Monday. At the same time, the trades were characterized by high volatility, oil broke through the local support level of 68.61 dollars, and only after that prices managed to win back positions to Friday's level.
Similarly, oil quotes reacted to news about expectations of oil production growth in Saudi Arabia and the United States. The head of Saudi Arabia's energy department, Khaled al-Falih, said Riyadh intends to increase oil production to 11 million barrels per day and, if necessary, to 12. However, if the daily supply deficit in the world oil market falls below 3 million barrels, Saudi Arabia will be able to cover only half of it. At the same time, investors' fears may be caused by another statement of Khaled al-Falih, if the increase in production did not occur, the market could see a significant increase in oil prices.
In addition, the factor of lower oil prices was the increase in the number of drilling rigs in the past week, as announced by Baker Hughes on Friday. Thus, the number of oil rigs increased by 4 units – from 869 to 873, which is not the largest indicator, which showed the effect of the short-term dynamics on Monday, but is unlikely to have the same value on Tuesday.
Nevertheless, investors' fears about the market deficit due to the imposition of sanctions against Iran remain a favorable factor for price growth. Along with the decline in production in Venezuela, this factor will dominate today's trading, as it has already become support for oil quotes on Monday.
Thus, the growth of oil prices is highly likely, with periodic attempts of traders to reduce the rate. Support levels for WTI crude oil can reach 68.90, 69.10 and $69.40 per barrel.
Forex. Cryptocurrency forecast
On Monday, the average price of Bitcoin was $6,577. Ethereum lowered its position to $206 by the end of trading, although during the session it was trying to rise above the level of 208. The most significant drop was shown by XRP, having appeared at the end of the day at 0.4613 dollars.
Thus, the beginning of the new trading week has not brought anything radically new to the current cryptocurrency flat. Analysts consider the closure of long positions, rather than speculation of stock players aimed at lowering the exchange rate of Bitcoin and other cryptocurrencies, as the main reason for this state of the market.
Yesterday's news background may help to slow the downtrend of XRP – so, it became known that Ripple will participate in the annual conference Sibos under the auspices of the international system of bank transfers Swift. The conference will be held in Sydney from October 22 to 25. This was the reason for the crypto community to talk about a possible unification of Ripple and Swift's efforts to promote distributed registry technologies in the traditional financial sector. Rumors are reinforced by a quote from Swift's official Twitter account that companies should evolve in parallel with the evolution of technologies such as the distributed registry. The company is preparing to introduce RippleNET, a blockchain network for financial institutions, which is considered an alternative to Swift.
Also positive news for the cryptocurrency market may be the introduction of payment system Neteller services instant buying and selling digital assets. In particular, such transactions are possible with Bitcoin and Ethereum.
Less optimistic is Jackson Palmer, the creator of Dogecoin, who said on Monday that the influx of institutional investors in the cryptocurrency market would lead to its excessive centralization. In his opinion, ETFs, Bakkt and similar instruments will turn the cryptocurrency market into an analogue of Wall Street. This position can be a signal for private traders to be as active as possible in the market until they are pushed by institutional traders.
Our forecast for cryptocurrency trading today assumes the continuation of Bitcoin fluctuations in the sideways trend with a slight decrease, support levels will be 6225, 6150, and 6080 dollars. Ethereum will try to climb to the level of Friday trading with a subsequent serious pullback down, and can test support levels of 200, 197 and 192 dollars. Ripple will follow the overall depreciation with support levels of 0.4595, 0.4580 and $0.4530.