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Euro shows miracles of volatility

Euro shows miracles of volatility
At yesterday’s trades all players’ attention was focused on the common currency, which was rushing within wide range, changing movement directions dramatically. In virtually all cases, the main movement driver was Greece. The market reacted actively to each news headline, linked with negotiations on debt issue. If in the first half of the day EURUSD pair grew rapidly to the range 1.1370 – 1.1380 after the message that positions of Greece and creditors had become closer, then cold shower started. Constantly changing news headlines provoked an equally rapid fall of euro. As a result, in the question of debt, everything stays the same, there are no real changes – negotiations continue and euro was shaken as by earthquake.

Today all attention will be focused on official report on labor from the U.S.A. Forecasts are good – growth of new work places is expected above 200K. Indirect signs appeared during the week (ADP report and weekly applications for unemployment benefits) also give hopes for good results. Still, everybody is talking about unpredictability of non-farm payrolls. The main question is what will be the reaction of the report. In case of weak data, everything is clear – dollar will face sale-off again. Still, it becomes more difficult if the report shows quite strong results. We have some doubts that at this moment it can considerably help dollar. Looking at yesterday’s roller coaster in EURUSD pair, we can make a conclusion that the market is too focused on Greek issue and too enthusiastic reacting to any positive in this question. There is a movement in terms of increasing agreement, so new positive related to this issue can appear. Under these conditions good data on US labor market can be practically ignored after short-term reaction at the moment of the publication and won’t give significant support to dollar.

 

Trade tactics:

Yesterday’s rapid growth of euro in the first half of the day let us leave the market for good price – we closed long position in EURUSD pair for 1.1360. Today we have no desire to enter the market on unpredictable non-farm payrolls. 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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