The weakness of Eurozone, the mercy of Iran and demarche of Sino

24 Eyl 2019

Some cases are still unresolved also news that the Chinese delegation has cancelled a planned visit to American farms only exacerbates. So yesterday's gold growth was more than logical against the backdrop of fears of the failure of negotiations on trade wars. Our position on gold is unchanged - we continue to look for points for asset purchases.

This is happening against the background of a decrease in oil quotes. Moreover, there was an additional reason for bears. The decision of the Iranian authorities to release the British tanker Stena Impero. Formally, this is a signal of the tension decrease in the region. However, you should not rely on peace in the Middle East. The situation continues to be unstable, especially after the United States decided to send the military to help Saudi Arabia.

However, our recommendation to sell oil remains relevant. In our opinion, the factors in favour of asset sales outweigh the arguments in favour of purchases. Among the main arguments the restoration of oil production by Saudi Arabia, fears of a decrease in demand on the oil market amid a deterioration in the global economy and the offshore revolution in the United States.

Euro update. PMI indices in the whole Eurozone, as well as its key economies - Germany and France - came out distressing. Production indices everywhere dropped below 50, falling below the most pessimistic forecasts. For example, the PMI in the manufacturing sector in Germany in September reached 41.4 with a forecast 44.0 (by the way, the rate of decline in Germany's economic indicators is the highest over the past 10 years). That is, economic activity is deteriorating rapidly. Although the PMI in the Eurozone as a whole is still above 50, judging by the current dynamics, it will soon go below this mark. Yes, and the current value of 50.4 is the lowest mark for the last 4 years.

Recall that we recommend selling the euro primarily against the Japanese yen, as well as the British pound. Even against the dollar, for all our disbelief in it, we are more likely to sell euros than buy. Moreover, the data on PMI indices in the USA yesterday came out not only above 50, but also better than forecasts.

Once again, we point on excellent opportunities for Russian ruble sales.