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    Last days of the month will define dollar’s middle-term prospects

    Last days of the month will define dollar’s middle-term prospects

    On Thursday the balance of power experienced significant changes in the exchange market. We presume that there are two reasons of such behavior of the market. The first and the main is that several insignificant economic indicators of the U.S.A. showed substantial growth yesterday. It’s weekly applications for unemployment benefits and PMI business activity in service sphere. As a rule, the reaction to them is inactive, but this time players decided to take this opportunity to renew dollar’s purchases. However, inactive reaction of the market to weak durable goods orders the day before seemed to give hints of retaining strong interest to dollar. The second reason was probably Saudi Arabia’s attack on Yemen. And if the first reaction was wait-and-see, then after some consideration players decided that in such situation dollar is the less risky asset. As the end of the month approaches, the struggle between bulls and bears intensifies.

    On the last day of the week the report with the final evaluation of GDP for the 4th quarter in the U.S.A. looks the most interesting. Dollar will be eagerly catching positive news. The previous evaluation suddenly and considerably corrected preliminary data downward, most forecasts point at probable improvement of these data. It’s an advantage for dollar. Last days of the month can largely predetermine further development of events in the market. If following outcomes of the month, dollar's index succeeds to close above 100.00, it will practically guarantee continuation of growth trend. For euro this point is the level 1.0600 – if the pair closes the month lower, then movement towards parity will continue.

     

    Trade tactics:

    Yesterday we didn’t lose anything, but earn practically nothing. We closed our euro’s long position when the pair returned below 1.1000. Yesterday’s closure considerably worsened euro’s prospects, still, we don’t exclude the probability that moods can change suddenly. Risks of multidirectional movements increased at the end of the month. To aggressive traders we suggest considering EURUSD sale from 1.0920 – 1.0940, stop is at 1.1030.

     

    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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