Market Watch review.
In today's release, we’ll cover the following topics:
Let me remind you that last week negotiations on a trade deal between the EU and Britain reached a critical level and a lawsuit from EU. But a number of experts, in particular Goldman Sachs analysts, expect to reach an agreement in early November and, as a result, Brexit deal ratification ahead of schedule - before the end of the year. In this case, the demand for the pound sterling may increase significantly.
Let me draw your attention to the GBP/USD currency pair. After another wave of sales, which was observed last week, the activity of sellers has noticeably decreased, which also indicates the general optimism of traders and investors regarding the prospects for a deal between the EU and Britain. Therefore, a breakdown of resistance at 1.3000 may confirm buyers' readiness to resume growth.
Moving to the American trading session, I would like to note a number of important events. I'll start with the forthcoming publication of the report on the change in US oil reserves. Analysts interviewed by Bloomberg expect a slight decrease in reserves. Therefore, their unexpected growth may put pressure on oil quotes, fully offsetting the optimism that we have observed over the past three trading days.
US WTI crude oil has returned to the psychological level of $40 per barrel, so only a noticeable reduction in reserves and general optimism in the US stock market can support black gold. Otherwise, the risk of another wave of sales will increase significantly. The bearish scenario takes into account the price decline to $36 per barrel.
I would also like to draw your attention to a very important event for traders and investors - the publication of the minutes of the Federal Reserve meeting. The appearance of supporters of changes in the current policy of the regulator may provoke a surge in trading activity in the U.S. dollar. At the same time, it is important to keep in mind the active discussion of another financial aid package for business and population in the U.S. and the incredibly active position of Donald Trump in this matter.
The signing of the law on the allocation of the next package of financial assistance will support the US stock market, thereby contributing to the further weakening of the USD. As a result, active sales of the EUR/USD currency pair remain in the zone of increased trading risk until the pair's quotes return to support at 1.1730.
Closely monitor the news background and be prepared for all the surprises of the market.