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Friday’s statistics didn’t influence the market significantly

Friday’s statistics didn’t influence the market significantly

The last day of the month was relatively calm. Weak inflation in the Eurozone as a whole was expected, so euro’s fall was limited. On the other hand, the first evaluation of US GDP for the 4th quarter was weaker than predicted, still, the reaction was inactive. Dollar closed the day with a slight increase, but there was no single dynamic in the market – the decline was mainly due to euro and trade currencies. One of the most interesting and unexpected event happened in the evening of Friday. The data that US drilling volumes dropped sharply, appeared to be below minimums of 2013, were published. After that oil price grew sharply, broke through the three-week range. If this growth shows stable dynamics, then it may become a signal for start of dollar’s correction in the exchange market.

Traditionally, in the first week of the month a set of interesting report is published. In the U.S.A. it is traditionally the report on labor. According to the communiqué of last FOMC session, this indicator doesn’t cause any concerns. However, forecasts are optimistic too. It is practically the only economic indicator of the U.S.A., which demonstrates stable and confident improvement now. Other indicators are uneven, and they are often worse than predicted. Speaking of the rest of US indicators, which are to be published this week, the data on ISM business activity and trade balance are of interest. Forecasts are mixed, so negative surprises are possible. In general, the optimism concerning US economic prospects is still retained, but more substantial confirmation of growth is necessary, otherwise hopes for increase in rates by the Fed in this year will start fading.

This week two Central Banks will hold their sessions on monetary policy – the Reserve Bank of Australia and the Bank of England. And if the Bank of England isn’t expected to bring anything new – hopes for in crease in rates in this year have practically faded, though accompanying comments can heighten disappointment, surprises are expected from the RBA. After the set of weak data the number of those who expect decrease of the rate at this very session has grown, what provoked further fall of Australian dollar at last week.

This week there are not many noticeable reports in the Eurozone – the final data on business activity and retail sales, and besides the data on industrial production in Germany. Forecasts can be called neutral, all economic negative is practically known, and is mainly included in prices. So, political problems may come to the forefront. There is no doubt that Greece will try to bargain concerning debt relief. It must not necessarily succeed in it, still it will make others nervous. The results of the elections in Greece will become an example for other countries, where debt loop is relevant. This year parliamentary elections will be held in Spain, where left party is gaining popularity, and which argues for refuse from debt paying as Greek Syriza.

Today the final production PMI on countries of the Eurozone, and the set of reports on the U.S.A., where production ISM is of more interest, will be published. PMI is unlikely to differ from preliminary data, which were mixed, so it isn’t to add the negative to euro. What concerns American ISM, there are more questions. Negative surprises are possible there, since last data were too uneven. There are no specific preferences in movement direction. Main currency pairs can continue consolidation.

 

Trade tactics:

EURUSD pair continues its consolidation, coming closer to the middle of the range 1.1100 – 1.1400. Bearish trend remains dominating, but dollar’s oversold restrains players. We have no desire to open to any direction in the middle of the range, and we don’t want to guess. Now – out of the market.

 

Any opinions, advice, news, research, analyses, prices or any other information presented on this webpage is provided as general market commentary and does not constitute investment advice. "Vector Securities" shall not be liable for any loss, including loss of profit, which may arise directly or indirectly from the use of this information.



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