Typical Non-Farm Number, the US Government in Disarray, and an Undervalued Ruble

It’s clear that more was expected from the Bank of England. The BoE not only did not change the rate, but it even hinted that it would not do so until 2018. Given Brexit and the need for the softest possible divorce, the decision is entirely logical, but traders were in a hawkish mood. The pound lost support, retreating a whole 100 points. Meanwhile, the yield on the UK’s ten-year government bonds fell to 1.17%. The flow of money out of the currency propped up the British stock market. On the hourly charts the FTSE soared upward, breaking through the confirmation line at 7440 and completing the formation of a double bottom. The target might be the recent high – 0.7520. Nothing critical happened on the daily charts. The pound is testing the lower boundary of an ascending price channel, which gives bulls an opportunity to open longs with short stops. If growth resumes, the target might again be 1.3260; if the support is broken through, we expect a pound at 1.3040.

In the United States, meanwhile, the internal political struggle continues. In his tweet Trump noted the inability to normalize relations with Russia because of the Senate’s actions, while Russia, for its part, notes the weakness displayed by the US President. At the same time, UBS Group AG notes that the Russian ruble remains the most undervalued among developing markets. The Russian stock market tested its strength at 1970 points, but it did not last. We might see the traditional Friday closing of long positions before the weekend, but this will not stop the bulls from counterattacking next week.

The EUR/USD tested 1.1900 yesterday, forming a spike. The trend remains bullish, so it is premature to close longs and, in the short term, one might try scalping up until a breakthrough at 1.1800. On Elon Musk’s statements about TESLA’s future, the stock jumped 7.4%. So, the “fuel” that the stock was lacking to break the trend was added. Technically, a gap up formed. Bulls are trying to form a double bottom and complete the formation with a breakthrough at $347.
Among today’s news traders will naturally be trading on the Non-Farm number. Given the local overheating of the dollar, volatility could be quite high, so we would advise cautious traders to stay on the sidelines.

Nikolay Dudchenko, Olymp Trade

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