In times of instability those who play a key role in resolving the instability and the crisis are the ones to benefit, which is the case for the Syrian crisis according to the Goldman Sachs trading team.
As the Russian and US rallies to resolve the Syrian crisis, we have received an unexpected announcement that Goldman Sachs Russian Ruble expectations have been shifted from negative to positive for 2016.
It is not just the statements from the Russian president Vladimir Putin, or his remarks that “he is to send the terrorists to the God and it is up to him to forgive them or not” but the actual economic figures which drive the Russian economy and that is OIL news.
Ivan Tchakarov an economist at Citigroup commented the following for Bloomberg earlier last week:
“Ruble assets have found useful support over the last week on a perceived rapprochement between Russia and the West. This relationship may, however, will be tested over the coming days and weeks as fundamentals continue to be weak, oil prices remain under pressure and a December Fed liftoff seems increasingly likely.”
Regarding Goldman Sachs’ 2016 expectations Russian Ruble, USD and Mexican Peso are to be on the bullish side, meanwhile the JPY and Euro are expected to depreciate against their counterparts.
The reason behind bullish USD and bearish JPY and EUR expectations lie behind divergence between the FED, ECB and BoJ. So far we have seen the buy the rumors rally for the USD which pushed the greenback higher and Euro lower, thus we can expect to see the next leg of the movement which will be about the actual decisions taken by the central banks.
Major trade opportunity will appear if the FED decides not to hike the interest rates, then we can expect the USD to depreciate. For now fundamentally Syrian events and discussions will become as the main trend defining events.
Bullish Oil alert
As the ISIL issue attracts more and more attention oil will be in the front-line of the financial markets. In case the coalition air-strikes aim to completely destroy the oil pipelines and refineries, it is likely that crude oil prices will shoot upwards.
Technically speaking WTI has its most relevant support at $38 per barrel level and as long as it stays above this level we are expecting the black gold to trade around $45 -48 per barrel zone.