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    The ECB collapsed euro again

    The ECB collapsed euro again

    Yesterday the exchange market faced surprises again. For the most part of the day the movement was multidirectional. Euphoria caused by news about probable compromise on paying debt by Greece disappeared rapidly. As soon as the fact that agreement needs time became obvious, interest to euro reduced and the pair rolled away from Tuesday’s maximums. Neither good PMI, nor slightly better retail sales help it. British pound was more fortunate. Growth of a regular PMI index above forecasts for the third time in a row allowed pound to overcome 1.5200. For dollar the situation remains neutral. Although reports ADP and ISM didn’t reach forecasts, still they are in growth phase, so they gave a moderate support to dollar yesterday. Late in the evening euro met payoff. The ECB issued a statement expressing its disapproval with some elements of new plan of Greece on restructuring debt, and besides, it announced that wouldn’t use Greek bonds in its QE program. After that the common currency fell sharply, leveling off all achievements of Tuesday in full.

    Today is one more intermediate day before the report on labor on Friday. There are few economic statistics, still they are various. In Germany it is production orders. Forecasts are positive, in fundamental terms euro has no specific reasons to fall now, but after yesterday’s decision of the ECB Greece is again on the top of agenda. In the U.S.A. it is weekly applications for unemployment benefits and trade balance. At this moment these indicators aren’t the most relevant now, though they aren’t a real threat for dollar.

    Probably, the most interesting event of this day will be the Bank of England session on monetary policy. Changes aren’t expected. After series of positive PMI this week, pound has targeted at growth. If the final communiqué doesn’t bring surprises, then this scenario can become real.

     

    Trade tactics:

    Unfortunately everything goes in the opposite direction to our plans yesterday. Not for nothing we have already noted higher risks of the game against the trend. Yesterday we bought EURUSD from 1.1445, but sudden decision of the ECB changed all plans. The position was closed on stop at 1.1350. Now – out of the market. We don’t exclude further decrease of the pair, and return below 1.1300, still, short-term technical picture remains unclear.

     

    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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