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Today euro is in Draghi’s hands

Today euro is in Draghi’s hands
Yesterday’s trades were active, though they didn’t show record ranges. In the morning euro was stricken by the report on inflation from the Eurozone – the data were weaker than expected. American statistics were also favorable for dollar – employment by ADP was considerably better than predicted. Janet Yellen’s speech sounded quite optimistic for dollar – she pointed positive tendencies in American economy and hinted that rates would be increased in December. During this speech dollar renewed multi-year maximums. Still, uncertainty about coming decisions of the ECB didn’t allow dollar bulls to develop this attack. Part of market players preferred to start fixation of long positions on dollar. Yesterday some other currencies also moved actively, particularly British pound, which fell by almost two figures. PMI business activity in building sector, which slowed down sharply, became a disappointment. Canadian dollar was actively moving in the range, though it closed practically unchanged. The Bank of Canada left interest rates unchanged, final comments don’t give grounds to hope for weakening of monetary policy in the nearest future. It was the reason why speculators stopped trying to sell loonie, despite strong fall in energy prices yesterday.

Today the main event will be the ECB decision on monetary policy. Everything else can be regarded as informational noise. The market expects decisive actions in further widening of stimulation measures from the regulator. Decrease of deposit rate and increase in volumes of assets buying-out is expected. Still, there are some doubts that these expectations won’t be met in full. It restrains euro from more active fall. If the ECB surprises markets by its decisiveness, then we can see new minimums of euro today. This year Mario Draghi has already “dropped” euro several times on outcomes of the ECB sessions. Sometimes he didn’t even do anything, just promised. It is possible that he will use his skills today too.

 

Trade tactics:

Yesterday our entry into the market was unfortunate. Purchase of EURUSD pair for 1.0610 made us nervous, when the market started to renew local minimums. So, when an opportunity appeared at the end of trade day, we closed our position with minimal profit in several point, having decided not to risk on the threshold of the ECB session. Today we are out of the market. We have no clear view of market reaction to outcomes of the session. Despite the fact that the common currency managed to close above 1.0600 yesterday, there are risks of minimums renewal. Sharp change of directions is possible, so we recommend not to play roulette today.

 

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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