Vector Securities - Analytics

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    Market’s activity is still low

    Market’s activity is still low

    Yesterday’s trades weren’t notable. Euro is still in the morass of the range, low activity is in other currency pairs too. Yesterday British pound and Canadian dollar felt a little better than the market, having realized movement potential, which had been underlined the day before. This time repeated speeches of Janet Yellen and Mario Draghi were even less interesting than the day before. By the end of the day dollar’s index passed positions slightly, but it has already been within the range for nine days in a row. The data on houses sales in the primary market were slightly better than predicted, still this event was practically ignored. There are two work days till the end of the month, and they are likely to repeat the scenario of last days.

    We don’t exclude that today most currency pairs, with few exceptions, will retain the tendency of last days, i.e. in fact they will remain in the same ranges. First of all, it concerns euro. The pair has got stuck in the range and reacts inactively to news background. Today in the Eurozone the data on German unemployment and common indicators of moods of the Eurozone will be published. Forecasts are moderately positive, still, these indicators are rarely in the focus of attention, and usually market’s reaction to it is short-term. Moderate growth of European currencies after their publication is possible, but it will be limited. Today the main focus is on the report on durable goods orders in the U.S.A. For last two months real figures of this indicator have been worse than predicted – fall of indicators is detected. This time forecasts point at recovery of orders, but uncertainty remains. From our point of view, this very indicator will have the greatest impact on trades. Market’s reaction will depend on the degree and direction of discrepancies between final data and forecasts.

    Speaking of local data, we’d like to highlight the second evaluation of data on British GDP for the 4th quarter. After Carney’s statement that increase in rates won’t be strictly “tied” to inflation level, pound felt encouraged, and its growth prospects look much better than euro’s ones now. If indicators of GDP are improved, then pound will have good reasons for renewal of local maximums. Today one more interesting event is publication of data on inflation in Canada. Tuesday speech of Poloz provoked strengthening of Canadian dollar, though in fact he didn’t say anything definite. If the data on inflation are weaker than expected, then attitude towards Canadian dollar can change sharply again.

     

    Trade tactics:

    Our yesterday’s opinion that pound was more interesting for trading at that moment was right. After breakthrough of 1.5480 the pair jumped dramatically, and almost immediately tested the range 1.5530 – 1.5340. There are chances for further growth and testing of the range 1.5580 – 1.5620. However, due to the lack of stability in the movement, we don’t take a risk to stand against the dollar for long and we have closed our long position on pound for 1.5550, which we opened yesterday. Meanwhile, short-term technical indicators on euro reversed upward. It is quite possible that today the pair can jump and try again to break through above 1.1400 with the aim 1.1440 – 1.1450. The movement above it is under the question. Euro changes direction within current range too often, so we don’t take a risk to trade in it. 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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