Weekly analysis- Forex Fundamental Analysis – Selling Brent and XAU/USD

The forecast for the week November 14 – 18:

XAU/USD:

Gold finished the last trading week by decline 5.8%, which is the maximum weekly drop this year. Famous agencies Reuters, Bloomberg and Dow Jones promised us collapse of US dollar and strong growth of gold if Trump wins the US presidential election. In fact, everything turned to be exactly the opposite! The last week, US dollar basket index updated 9 months’ High! Yield on 10-years’ US treasuries has exceeded 2% – for the first time since 29 January. Dynamics of futures on raise of the interest rate by Fed’s points to 82% probability of its raise at the meeting on December 14, which is the highest level of the current year! What is good for US dollar is bad for gold and in this regard, we can expect continuation of negative trend on gold. Not only gold sales are observed, but in general sales of the commodity market, which indicates an extended strong trend. I open Sell trades at 1235/1244 and put take profit at 1216.

Brent:

The last three weeks in a row Brent has been closing trades in the “red zone”. In this context, many traders may aks a question: has the downtrend exhausted and we need to buy oil at current levels? In my opinion, this week we will see a continuation of the downtrend for two reasons. First, oil production by the key players in the market is growing week by week. On November 11, OPEC reported increase in production to 240 thousand barrels / day by the end of October to the level of 33.6 million barrels per day. On Wednesday United States reported that 5 months’ High in oil production had been reached. On Friday the oilfield services company Baker Hughes reported growth of number of drilling platforms in the US and Canada by 2 and 13 units, respectively, and in this regard, we will receive messages about growth of oil supply in the market again. Usually it affects shares. Second, a strong consolidation of the US currency will also put share prices under downward pressure. Я open Sell trades at 45.40/46.70 and put take profit at 44.00.

S&P500:

US stock market is growing. Though I would not open Buy positions now, because significant growth in treasuries makes investing in the stock market less attractive. Shares and bonds usually compete for funds from investors and now bonds show attractive yield for institutional investors. It can raise capital on the bond market and promote outflow of capital from the equity market. In my opinion, in the first half of the week we can see growth of quotations against optimistic growth in securities of the banking, oil and health sectors due to victory of Trump as well as positive October’s report on retail sales and growing income. Then, on Thursday October’s release on inflation will be published, which may cause new growth of yield of government bond and on this background, we will see profit-taking on “Long” trades. In my opinion this week it will be as follows: if the index updates historical High (2194.4), we should open short positions in view of the above factors. I open Sell trades 2194.5/2210 and put take profit 2169.