We should sell XPD/USD and XPD/USD | 19 February 2016

Forecast for 15 - 19 of February:

XAU/USD:

The last four weeks, this precious metal has been showing a strong growth of quotations on the background of weakened US dollar and outflow of capital from the risky assets. Since the beginning of the year, the broad market index S&P500 had dipped by 8.78%, the dollar basket index had lost 2.8% and the gold had grown by 16.49%. The yellow metal has climbed very high and, in my opinion, its further growth without correction will be very difficult. At least correction can take place or even reversal of this medium-term uptrend. During the same period, platinum had added 7.49%, which is by 2.2 times less. This week we will receive the January report on inflation in the USA, which could support the US currency. Firstly, a strong labor market always boosts inflation and in this context, we can expected the core CPI data 2.1% at the median level of forecast in annual terms. Last Friday, we received a positive report on retail sales. Sales volume grew by 0.2% in January, while the December figure was revised from -0.1% to + 0.2%. In this connection, we can expect positive inflation data, which will boost the yield of 2-year's US treasuries and make bulls take profit on long positions. This week we open Sell trades with XAU/USD on growth of quotations to 1245/1257 and take profit at 1210.

XPT/USD and XPD/USD:

During the week, we should expect dominance of bears. Negative dynamics on the manufacturing volume in the G-10 indicates that in the first quarter we shall not expect a strong demand in the industrial metals. The same trend is confirmed by copper, demand for which is regarded as a strong leading indicator. Last week copper slipped by 3.14%, and since the beginning of the year decline is 1.78%. This trend is opposite to the one we see in the platinum group, which at the end of last week had strengthened by more than 3.5%. Another great indicator for the global industry - Baltic Dry index, which continues to update the multi-year lows. This indicator is one of the most impartial indicators of economic activity, as it measures the demand in raw materials in real time, whereas many economic indicators consider the past. This week we open Sell trades with XPT/USD on growth of quotations to 960/975 and take profit at 930. We also open Sell trades with XPD/USD on growth of quotations to 528/540 and take profit at 510.

S&P500:

In the first half of the week we expect prevalence of bulls - for two reasons. Firstly, the positive macroeconomic data on retail sales and applications for unemployment benefits of the last week gives more hopes for the US economy in the first quarter. The volume of retail trade for the control group in January rose by 0.6% (consensus was 0.3%). This indicator closely correlates to the indicator of consumer spending, which is the basis of US GDP. Secondly, 10% of Friday's increase in oil quotations on the background of moderately positive news encourages continuation of an upward trend. This in itw turn will support the demand in the securities of the energy sector and thus will push up the index. We can not ignore positive quarter's reports by the leading US corporations: PepsiCo and Coca-Cola reported an increase in their net profit in the 4th quarter of 2015 against the same period in 2014 to 31.29% and 59.74%, respectively. Disney Company announced the record-making return in the company's history, which amounted to 15.24 billion US dollars, which is explained by success of "Star Wars" release. Net profit for the 4th quarter of 2015 increased by 28.34% compared to the same period in 2014. However, the report on inflation in January, which is scheduled for February 19 may cool down bulls. As we noted earlier, we can expect release of positive data, which in turn is a negative factor for the stock market. We can not ignore problems of the European banking sector, which may again discourage investors from the risky assets. Against this background, we should expect the flat within the range of 1810 -1910.