Oil Prices vs Deflation

This year can mark the high of the oil prices, as proven yesterday with the first drawdown moment in the last 17 weeks. The flat production data in U.S., is slightly lower than the latest highs of 9.4 mb/d. If things continue, U.S. oil production might take up where it has left and the oil producers will be quite enthusiastic in producing more oil.

Another important element associated with oil price is inflation and shouldn’t be missed. As we all know the deflation is a big fat elephant in the Eurozone and U.S. and Fed are focused on increase of Rae. However, Fed first wants to see the inflation rate at the acceptable level, which is 2%. So, since the oil prices climb, the end product price increase together with it, making Fed happy and, therefore, traders can shoo the elephant away, since there is no longer a fear of deflation.

UK Election

We all want to know how to trade during UK election. Since the outcome of the election is quite unclear at this point, there are couple of strategies that might be used by most traders worldwide.

Let’s go back in time for a second to 2010, when GBP/USD pair bounced back almost immediately after the election. On the other hand, in order to expect the same reaction, the party that wins the election must be able to form coalition without a delay.  In this case, GBP/USD pair might go for about 4% sell off.

Another thing you can do is to use your sell stop order and basically chase down the move. This is risky and not for everyone, but the trade is based on momentum and finishes rapidly, however it might create some seriously huge spikey moves you want to get your hands on. You can place the sell stop orders under 200 to 100 pips of the market price and a jerky jump from hung parliament can make you some serious pips.

Lastly, if you are all set with risk/reward ratio, you can simply sell GBP/USD before the polls close, because once those polls are closed the downward spike will throw some pips your way.

USD

Dollar sees its lows with almost 5% fall in the last month due to weaker than expected data. Investors are now pushing their bets on Fed increasing the interest rates, although some traders are convinced there will be no rises in the near future.

US Job data released on Wednesday hints that U.S. sees the lowest employment rate in over a year.  Keep your eyes on non-farm payrolls on Friday.

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