News background and trading ideas for 07/11/2018

All eyes were turned yesterday to the midterm Congressional elections in the USA. It is only natural that the dollar was under pressure. Recall, market’s concerns were due to the likely victory of Democrats and their takeover of both Houses of Congress. In this case, the basic scenario was the following one: The House of Representatives goes to the Democrats while The Senate remains under Republicans.

According to the current results, the basic scenario takes place so far: the Senate is under Republicans meanwhile the House of Representatives goes to Democrats. That is no Armageddon is off. Indeed, the dollar will feel uncomfortable for a while, but we don’t see any causes for its selloff. Moreover, it’s worth remembering the announcement of the FOMC meeting outcome on Thursday. Recall, precisely the tightening of Fed monetary policy was one of the triggers of the dollar’s growth recently.

From macroeconomic statistics on Tuesday, it’s worth noting another portion of weak data from the Eurozone. The PMI Composite Business Activity Index fell to its lowest level in the last two years (53.1). And this index for Italy generally fell below 50, which means a decline in business activity in the country.

The situation with the Brexit meanwhile is slowly but confident going to its end. Theresa May recently has said that will do her best for the deal conclusion in this month. It is another confirmation of our core trading idea - the pound’s purchases amid estimates outcome of negotiations between EU and Great Britain by markets.

The oil market meanwhile has ignored the US sanctions against Iran. It was due to the entering of rivals to the vacant place (Saudi Arabia, Russia, Iraq likely used this situation), as well as the fact that the USA has allowed to 8 countries to import Iranian oil, what’s, in fact, reduced the effect of sanctions for the oil market. Let’s remind, our trading idea - is sales of oil. Do not either forget selling the Russian ruble.