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Draghi said nothing encouraging, but it didn’t collapse euro

Draghi said nothing encouraging, but it didn’t collapse euro
What concerns previous day, we’d like to highlight that dollar suffered most losses against euro, against other pairs it retained relative balance. Probably, it indicates that in the nearest future investors’ wide interest to dollar will return (labor report will be published on Friday), may be other currencies will start growing too. Now we find it difficult to estimate the significance of such selectivity. However, euro had own reasons for growth yesterday. The turning point appeared during Draghi’s press conference. The ECB increased forecasts on inflation, and optimism about Greece was expressed. Still, the main thing that strained players most of all is that Draghi had ignored the statement of Coeure about increased bond buy-back by the ECB, herewith he noted that markets would have to accept high volatility in the bond market. It increases risks for bond holders, and the yield of German bonds grew after it and the common currency followed it. We’d like to note that European statistics didn’t interfere with euro’s growth – PMI were better than predicted, unemployment and retail sales improved. As usual in recent times, American statistics showed contradictory results – quite good ADP report and trade balance, but weak ISM in service sphere. As a result, we have one more day of active growth of euro, but almost stalling in case of other currencies.

Today news background isn’t very rich. Australia has published the data on trade balance, which detected sharp increase in the deficit against the background of lowered demand for raw goods which are a significant part of Australian export. It provoked weakening of Australian dollar. In the afternoon the Bank of England will announce its decision on current monetary policy, and changes aren’t expected. Comments on outcomes of the session are also unlikely to bring surprises. We presume that pound will react inactively to outcomes of the session and after short-term fluctuation will move together with the market. Today in the U.S.A. there is little news too. There are weekly applications for unemployment benefits and productivity for the 1st quarter. Under lack of strong drivers, the market will probably lower its activity sharply, and entry into consolidation phase. Still, due to inertia euro will be probably in high demand in contrast to other currencies.

 

Trade tactics:

Yesterday we opened long position on euro even better than we had planned – for 1.1110, stop is set at the entry point now. Today we expect renewal of local maximums in the pair, and above 1.1290 we will seek for an opportunity to exit the market (in the short term the pair looks overbought). Herewith we do not recommend opening short positions, there are no any signals for it. Rollbacks should be considered as a chance for new purchases of euro.

 

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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