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Dollar fell victim to a new wind of optimism about Greece

Dollar fell victim to a new wind of optimism about Greece
Greek saga still shakes the exchange market. Yesterday the main movement driver was regular series of information leakage, telling that the sides became closer in terms of seeking compromises on debt issue. US representatives are actively encouraging to achieve a mutually acceptable solution, being afraid of rapid and uncontrolled growth of dollar. The funny thing is that the EC representatives carefully access negotiations and prefer not to hurry with victorious implementations. However, this very factor was the main one yesterday. Besides, yesterday’s economic statistics just strengthened optimistic moods – inflation of the Eurozone was better than predicted, conditions of German labor market showed no signs of worsening, and US production orders fell contrary to expectations. 
This day is eventful, especially for euro. As we have already noted, formally the ECB session on monetary policy is of first importance. Still, there are no signs of preparation for new steps. Two questions will be in the focus – increase of assets buying-out and Greece. Herewith, the negative of the first question can be leveled off by the second one, if Draghi confirms that compromise between Greece and creditors is close. In this case, euro can continue growth at the same rate as yesterday. European economic statistics won’t spoil euro’s prospects – retail sales promise good bounce after two months of fall (at least, German data promise such forecast), unemployment is stable too. There is some tense about final data on business activity in service sphere – they can be revised downward. Still, in general, it doesn’t change the situation – if moods about Greece don’t change sharply to opposite ones, then PMI can’t reverse the market. 
The second half of the day will be accompanied by American statistics – ADP report on employment in private sector, trade balance, ISM in service sphere. Reports are quite significant, but now the market is focused on European news. Taking into account, instability of American data, it can be supposed that this time they will be also contradictory, what will only strengthen pressure on dollar.
 
Trade tactics:
Our yesterday’s warning that short positions would be closed wasn’t useless, we hope that it helped to prevent losses. The results of previous day radically changed technical picture in EURUSD pair, indicators reversed upward sharply. Under such conditions, there can be no talk of euro’s sales in the nearest future. Herewith, the question of purchases isn’t so simple – it is difficult to define the point of entry into the market, and decide on the size of stop. For today we consider euro’s purchase from 1.1120 – 1.1130, stop is at 1.0910. Such farther stop is to be set to avoid dislodging of positions under higher volatility. Accordingly, risks of losses increase sharply under such conditions. 
 
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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