December almost comes on the heels, so it's time, to sum up, the past research and make new plans. So, the forecast for the preservation of the difficult political situation in the UK was justified, the bet on the drop in oil production has played out. Eurocurrency went up to the Norwegian krone and the Canadian dollar by 2% and 0.6%, respectively, and the British pound fell to the American dollar and the Japanese yen by 2.7% from its peak in November. In relation to the euro, the loss of sterling was 1.9%. Consequently, the strategies of gradually increasing short positions against the currencies of oil-exporting countries and selling pounds on growth have benefited.
What will December bring?
For over 40 years, European currencies and the New Zealand dollar are often in positive territory in December. Their main support is seasonality. The first winter month is favored by New Zealand's dairy farmers. As for the euro, the impressive demand for this currency is due to the large flow of tourists wishing to visit the Old World during the Christmas period. The dollar is often depressed at the end of the year, as a rule, at this time, the closing of positions in dollar pairs is noted. The "American" managed to circumvent only the Japanese yen and the Canadian dollar.
If you pay attention to the statistics, then you can find hints of the exacerbation of the trade conflict between Washington and Beijing. Such a scenario contributes to an increase in demand for currencies whose countries of origin are closely connected with China. Asylum assets are likely to decline. Leaders of the United States and China are unlikely to quickly solve the global problem.
Oil in the near future should touch the bottom and consolidate. This is evidenced by the different positions of the Canadian dollar and the Norwegian krone. The weak position of the national currency of Canada can be associated with a slowdown in the normalization of the monetary policy of the Central Bank. At the last meeting, the Canadian regulator tried to play the role of a "hawk", but a statistic without a positive, primarily on inflation, could make its own adjustments. A similar reason could knock down the US dollar in December. If we take into account the November statements by members of the Federal Reserve, then one might think that at the last meeting this year, the regulator, although raising the rate, will reduce the forecasts.
Based on the foregoing, interesting investment ideas next month will be the sales of USD / CHF and USD / SEK pairs, as well as the purchases of EUR / USD, EUR / CAD, and CHF / JPY.
The ability to form long positions on the NZD / JPY pair could create a breakthrough in relations between the US and Chinese authorities following the G-20 summit in Buenos Aires this weekend.
In Westpac believe that "loonie" can shoot in connection with the summit. Analysts are reminded of comments by Larry Kudlow, White House Economic Advisor, hinting at the possible signing of the renewed North American Free Trade Agreement (NAFTA) during this event.
Such a development has not been taken into account by the market, experts say, which can inflate the Canadian dollar rate. In Westpac, it is advised to consider buying it against the yen at current levels of 85.45 with a target of 87.00 and a stop at 84.55.
Banking analysts also pointed to the sustainability of the loonie to the drop in oil but warned that the risk for long positions to CAD / JPY is from the dialogue of Donald Trump and Xi Jinping. Negative in the negotiations of the leaders of the two countries at the summit will hit the markets.
The material has been provided by InstaForex Company - www.instaforex.com