Forecast for 19 一 23 of September:
This week we should sell gold as the negative news background was formed. The first reason for sales is strengthening of the US currency. Gold prices are denominated in US dollars. Along with growth of the US currency, gold price is getting into troubles. The last Friday, USDX index surged by 0.82%. On a breakthrough of 96.25, we can expect growth to the 97 figure. What can be the basis for jump of US dollar? It can be driven by ease of the monetary policy by the Bank of Japan that would be undertaken on Wednesday - 21 September. Secondly, because the Bank of Japan may introduce additional stimulus, this factor will boost the "risk appetite", which in turn has a negative impact on price of safe assets (primarily including the Japanese yen and gold). Thus, this week we should open Sell position on growth of quotations to 1315/1326 and take profit at 1301.
In the first half of the week we should open Sell position. The reason is expectations of further increase of oil production in North America, which along with the end of the driving season may cause a sharp surge of the crude oil reserves. In its regular weekly release, the oilfield services company Baker Hughes once again reported about growth of the number of US drilling rigs to the level of 416. In Canada and Mexico, this number grew to 75 and 19 rigs, respectively. In Mexico the figure reached the maximum level over the past five months. When oil production tests the 45 figure, we can expect an upward bounce of the oil price. Firstly, ease of monetary policy by the Bank of Japan will increase the demand in risky assets, which has a positive impact on cost of the black gold. Secondly, in Algeria on September 26一28 the International Energy Forum will be held, where it may be decided to freeze oil production. Prior to this event, speculators are buying oil contracts and after the summit they will begin to take profit on Long positions. Thus, this week we should open Sell position on growth of quotations to 46.70/47.30 and take profit at 45.10. Then we should open Buy trades and settle profit at 47.00.
This week, the main event will be announcement of results of the meetings of the two central banks: the Bank of Japan and the US Federal Reserve. The actions of the monetary authorities will determine the course of trading on the US stock market. Both meetings are scheduled for September 21 and in this regard, by this time, we can expect developing of the flat trend, as traders will take a waiting position. The consensus forecast of economists and investment banks is the same for both events: changes are not expected. However, the changes can take place, both real and verbal. Real change can be undertaken by the Bank of Japan. Firstly, in the last four months, inflation has been negative in annual terms, the last time such a trend was observed in the first half of 2013 and the monetary regulator had to resort to additional stimulus. Secondly, over the last five month, the manufacturing PMI index has been below 50%, indicating a downtrend. Japanese industry is about to experience difficulties from excessive consolidation of the national currency. Thus, on Wednesday the Bank of Japan may either cut the discount rate, or increase its QE program. This trend will have a positive impact on the Japanese and the US stock markets, as the number of carry trade operations will be increased. US Federal Reserve is expected to be limited by only verbal interventions and is going to indicate that current statistics on inflation and the labor market is not enough to raise the interest rate. However, it may increase the rate on the next meetings. Such rhetoric will be neutral for the stock market, as investors have already accounted it in the quotes.Thus, this week we should open Buy trades on drop to 2121/2100 and settle profit at 2160.