Vector Securities - Analytics

Vector Securities

377.25 5.25/10
73% of positive reviews
Real

Dollar opens a new month in a good mood

Dollar opens a new month in a good mood

The last work day of the month was quite boring and without notable movements. Consolidation can be considered after strong movement the day before. The market was practically indifferent to quite interesting economic reports on inflation in Germany and the second evaluation of GDP in the U.S.A., herewith both the inflation and GDP were slightly above forecasts, having balanced forces of two parties. In general, by the end of the day dollar grew slightly and it retains prospects for further growth.

This week there are few statistics in the U.S.A. Undoubtedly, the focus will be on the official report on labor. This indicator is the best reflection of improved situation in US economy. For last five months the figure of new work places growth has been above 200K. For last five years unemployment level has decreased from 10% to 5.6 – 5.7%. Long-term unemployment situation is improving too. Expectations about upcoming report are also quite positive. Accordingly, the attitude towards dollar remains favorable. There are reasons to suppose that the beginning of this month will be dollar’s.

Speaking of other events of this week, we can highlight series of sessions by Central Banks – ECB, BoE, BoC, and RBA. European regulators aren’t expected to undertake any radical steps (the issue of increase in rates isn’t relevant for the Bank of England yet, and the ECB has already announced the launch of European QE and now the focus will be on its implement), still, what concerns expectations about the Bank of Canada and the Reserve Bank of Australia, there is some intrigue. Speaking of the Bank of Canada, recently there were quite strong expectations about regular decline in rates and the only thing that shook this confidence was the speech of Poloz, which was in fact quite neutral, and it influenced the rate of Canadian currency immediately. Still, it is quite possible that the Bank of Canada will bring surprises. The same is true for the Reserve Bank of Australia. If these regulators decide on decline in rates, then we will see sharp weakening of corresponding currencies. This week there is a lot of European economic statistics. Still, taking into account the fact that the market practically made a choice last week, in spite of successful end of negotiations on Greece, any positive will give only short-term support to the common currency and these data are unlikely to provoke reversal of current trend.

Today is the first work day of a new month, and a lot of statistical information is published. In the Eurozone it is final production PMI, unemployment, inflation. We’d like to note that last economic data from Europe point at some stabilization. It concerns even inflation – the data on Germany showed a slight growth last week. However, players understand that the decision on quantitative easing has already been made and will be implemented, what is a negative for the currency in the long term. Today’s statistics of the Eurozone aren’t expected to be dramatic, still it is unlikely to provide a significant support. Today US statistics can become critical again, where reports on personal incomes and expenses, building expenses and production ISM will be published. Last indicator is probably the most significant in today’s set of statistics. Although the forecast on it promises a slight decrease, still, the reality can be better. Recalling how active was the reaction of the market to positive data on durable goods orders last week, the market may continue looking for reasons for dollar’s purchases in American statistics.

 

Trade tactics:

As we recommended on Friday, we opened short position in EURUSD pair from 1.1240, stop is rearranged at the entry point. Now we suggest development of descending trend to 1.1100 – 1.1120, where we will decide on further fate of the position.

 

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.



To leave a comment you must or Join us


By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree