Thursday, technically and ideologically, became a tipping point in market sentiment regarding Brexit. Pending the adoption by the British Parliament of the "May Project", the dollar weakened visibly relative to major world currencies. Since Brexit is also important for Europe, the euro added 31 points. The growth is small, but it occurred at high volumes (there was a struggle with the "bears") and on the daily chart the price went above the balance line. On the four-hour chart, the price fixed above the balance line and above the Krusenstern line – the indicator trend line. The Marlin oscillator indicates rising trend in both graphs.
Earlier, we thought that by adopting the "May Project", the pound and the euro could decline "by fact", but it seems that the rising potential of European currencies as an indicator of a positive assessment of "soft Brexit" has not yet been exhausted.
Against this background, emotional assessments of the Fed's prospects for monetary policy may change. Yesterday, the head of the Federal Reserve Bank of Atlanta Raphael Bostic said that the rates are close to neutral. Probably, the Fed really thought about the problem of the rise in the cost of public debt service, and it may be that next year the rate will be raised only once.
In the long term, we continue to adhere to the scenario of strengthening the dollar, as geopolitical and macroeconomic factors can support the demand for the US currency for a long time, but in the medium term the Brexit issue has not yet been played out.
Yesterday, ADP data on jobs in the private sector showed an increase of 179,000 jobs against 225,000 in October. The media immediately published materials about the saturation of the labor market, although the indicator is quite high, which has the potential for a rather slow compression. Today there will be data on jobs in the non-agricultural sector of the economy - a forecast of 198,000 against 250,000 the previous month. The expected figure is definitely high, but it will now become much easier to "discredit" it. These are all signs of a set of measures aimed at the medium-term weakening of the dollar. Probably for the period of the most comprehensive repayment of public debt.
So, today's market reaction to employment data in the US will be an even more suggestive indicator of investors' attitude to the decision of the British Parliament on Brexit.
We expect the growth of the euro to 1.1472 (Krusenstern line on a daily basis and the same peak on November 20) and further to 1.1621 (high on October 16).
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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