Vector Securities - Analytics

    Vector Securities

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    Speculators don’t want to take a risk before long weekend

    Speculators don’t want to take a risk before long weekend
    Players are nervous before the combination of data on unemployment in the U.S.A. and long weekend, we presume it’s the only reason of quite strong bounce of dollar at yesterday’s trades. However, if in the morning messages about widened limits of allocated funds to Greek banks by the ECB supported euro, what indicates remaining opportunities for agreement between Greece and creditors, then American statistics could not facilitate it. Trade balance as well as weekly applications for unemployment benefits and production orders were better than predicted. Still, it was after publication of American data that dollar started to decrease more actively. From our point of view, short-term speculators fixed long positions on dollar, not wishing to become dependent on unpredictable non-farm payrolls. 
    Today the only event that deserves attention is publication of official report on labor in the U.S.A. Preliminarily we have relatively “weak” report by ADP and decent decline in applications for benefits in last weekly report. Herewith the report on labor itself often shows figures, which are totally unrelated to these indicators. Taking into account low liquidity appeared to catholic celebration of Good Friday, market’s reaction can be sharp, but short-term. We suppose that the market will react to the fact – strong report will be in favor of dollar, weak – against dollar. 
    Trade tactics:
    We have to recognize that such strong rollback of euro from minimums was an unpleasant surprise for us. We expected more moderate correction. Now, in case of week’s closure above 1.0920, there will be higher chances for development of more substantial correction up to 1.1400 – 1.1500. The return of the pair below 1.0800 will retain the probability of at least repeated testing of previous minimums in the range 1.0500. Today the choice of direction fully depends on the data on labor market in the U.S.A. As we have had quite comfortable entrance to the market, we continue to keep euro’s short position, it makes no sense to close it at current levels, stop is at the entry point. However, we have to admit that refuse from its closure below 1.0800 was a tactical mistake. 
    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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