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)
On Monday, the quotes of the pound-dollar pair rose slightly from the level of 1.3005 to the value of 1.3060 at the end of the trading session.
The dynamics of the pair was determined not by macroeconomic statistics, but by the correction of the dollar due to profit-taking on the results of the growth of the US currency last week, as well as positive news in the context of Brexit, announced earlier.
In addition, on Monday it became known about the continuation of negotiations between the UK and the EU at the technical level, as reported by Margaritis Schinas, a representative of the European Commission, stressing that there is no need to convene an emergency summit on Brexit.
Yesterday, the index of business activity in the UK services sector for October was published. The index failed to become a positive factor for the growth of the British currency due to the fact that the actual figure of 52.2 points did not coincide with the forecasts of analysts at 53.3 points, however, did not have a significant impact on the pound and in a downward trend.
Today, the dynamics of the pound/dollar pair will be influenced by the publication of data on the number of open vacancies in the US labor market. Over the past four months, this indicator shows a significant increase, besides, other American statistics from the employment sector recently shows mostly positive indicators. JOLTS statistics can be a catalyst for the growth of the dollar.
We expect that during the trading session on Tuesday there will be a pullback of the pound/dollar pair to the support levels of 1.3040, 1.3015 and 1.2990 .
Forex. Gold price forecast
Gold quotes started the new trading week moving up from $1,233 to $1,235 per troy ounce, but they subsequently fell to 1,231 at the close of trading.
The pullback of prices for the precious metal is primarily due to the profit of traders fixing profits after the gold rally of last week. The cost of a troy ounce reached a three-month high last week. In addition, in recent days there has been an increase in short positions on gold, especially on the part of hedge funds and institutional traders, who increased the net short position to a three-week high of 45,622 contracts, according to statistics of the American Commodity Futures Trading Commission. Gold also continued to play back the release of Friday’s U.S. employment statistics for october. It is worth noting that the dollar index fell by 0.21% to 96.14 on Monday.
The determining factor in the dynamics of gold quotes today and in the following days will be the midterm elections to the U.S. Congress, which can provoke volatility in financial markets because of the high probability of forming a “divided parliament” if Democrats get power over the House of Representatives and Republicans get control of the Senate. That would allow Democrats to block key Republican initiatives, such as tax cuts for the middle class, that would weaken the dollar.
Simultaneously with the medium-term elections, elections will be held for governors of states and territories. Their results could have an impact on the policies of Trump and his administration to impose new trade tariffs and develop approaches to trade relations. Given that this area is a factor of pressure on the dollar in the context of U.S.-China trade relations, and as a result – a catalyst for the growth of gold prices, investors will be inclined to hedge risks through gold assets at the slightest hint at its instability.
In today’s trading we expect the scenario of gold quotes growth against the background of the midterm elections in the United States to resistance levels of 1236, 1238 and 1240 dollars per troy ounce.
Forex. North American Oil Forecast (WTI)
On Monday, quotes of a barrel of WTI crude oil reached the level of 62.86 dollars per barrel, the minimum change at the end of the trading day, but showing, at the same time, high intraday volatility
The main news yesterday was the entry into force of the second package of U.S. sanctions against Iran, imposing a ban on the trade in Iranian oil. It was as a result of the oil embargo that commodity prices showed corrective intraday growth.
The U.S. State Department has tried to reduce the somewhat tense market situation by stating the high level of supply in the market due to the growth of oil production, thanks to which it is possible to compensate for exports from Iran. Also, finally, became known the full list of countries for which the U.S. made an exception to the oil sanctions, allowing them to buy raw materials from Iran during the transition period of six months. It includes eight countries – Greece, India, Italy, China, Taiwan, Turkey, South Korea, Japan. Both of these factors reduce the fears of oil traders about the deficit and stimulate the downtrend for oil.
Hassan Rouhani, Iran’s president, said Monday that Tehran will continue to sell oil bypassing U.S. sanctions. It was also a signal to reduce the anxiety in the market.
Tonight, the American Petroleum Institute’s report on commercial oil reserves in the United States is expected to be published, which is one of the determining factors in the dynamics of oil prices. Analysts expect an increase in oil reserves, which will hinder the recovery of the cost of raw materials.
In our forecast for today we assume a downward trend for the price of WTI crude oil and their decline to support levels of 62.80, 62.60 and 62.25 dollars per barrel.
Forex. Cryptocurrency forecast
The beginning of the week was marked by quiet trading of Bitcoin and Ethereum. At the start of Monday’s session, Bitcoin showed growth to $6,488, and at the end of the day it fell to $6,475. Ethereum started and finished trading at $210. XRP, on the other hand, showed growth, the value of the cryptocurrency increased from 0.4665 dollars to 0.4896 dollars by the close of the session. The positive dynamics of Ripple is due to the reaction of traders to the news that the payment system Send Friend, which has a large enough coverage, implements the technology xRapid developed by Ripple. The system is mainly aimed at Filipino migrant workers and aims to optimize their remittances, which solves the current problem, and therefore gives impetus to the growth of Ripple. In addition, the market played down the news of the opening of Ripple office in Dubai in the United Arab Emirates until the end of 2018.
The driver of a slight increase in all other cryptocurrencies was the hard fork Bitcoin Cash. Its division into two virtual currencies was actively supported by the Binance exchange, which contributed to the increase in the price of cryptocurrencies first on it, and then on other platforms.
We expect that the cryptocurrency market will continue its upward correction at Tuesday’s trading. Bitcoin will move to resistance levels of 6500, 6530 and $6570. Ethereum can try to break through resistance levels at $213, $216 and $218. XRP is also likely to continue to grow and will aim for resistance levels of 0.4910, 0.4940 and $0.5000.