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Dollar has started to retreat again

Dollar has started to retreat again

For last days the common currency went hot and cold all over, depending on news background. And if the evening before euro fell sharply after the ECB announcement about Greek bonds, then yesterday the pair regained almost all losses. It was preceded by several announcements – the head of Bundesbank claimed that deflation issue wasn’t so acute now; the European Commission increased forecasts on economic growth in the Eurozone for 2015 and 2016; although the Minister of Finance of Greece noted retained disagreements on debt issue after negotiations with his German colleague, still, herewith he claimed that Greece would do all it could to avoid default, negotiations will be continued. Besides, yesterday’s statistics were in favor of euro – German production orders were better than predicted, and US trade deficit showed record growth. It somewhat calmed investors and euro returned above 1.1400. Yesterday British pound benefited most of all from retained uncertainty. The Bank of England passed quietly, without surprises, there were no negative statements following its outcomes. It allowed pound to actualize technical signals, pointed at probable growth, as we noted yesterday, and let close the day above 1.5300.

On the final day of the week the focus of attention will be on US report on labor market. Forecasts on growth of new work places are still at high level, though unemployment level can rise due to peculiarity. Market’s reaction to the positive can be mixed. Euro regained the ECB statement too easy, so, we’d prefer not to exclude further development of correction decrease of dollar. The more so since now economic statistics are in favor of the common currency – today the data on German industrial production will be published and they are expected to show growth.

Speaking of local data, we’d like to highlight the report on foreign trade in the U.K., which have shown chronic deficit for last years. Usually its influence is limited. If the data appear to be weaker than predicted, then it will probably slow down pound’s growth.

 

Trade tactics:

Unfortunately, we have to kick ourselves. First, cause we were hasty entering the market, and secondly, since we determined the level of stop incorrectly. As a result, we got a loss on Tuesday. At this moment our indicators point at probable repeated growth of euro above 1.1500, there are some risks that previous correction maximums in the range 1.1530 will be renewed. To aggressive traders we recommend to consider opening of long positions as a preferable option now. We recommend putting off sales.

 

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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