Dollar returned to the levels preceding the report on labor
On Tuesday dollar regained all losses sustained after publication of weak data on labor last Friday. The reason was weak data on European PMI. There can be talk only of the reason, since in the reality most indicators increased as a result of the month, but growth rates of some of them lowered in contrast to previous results. Still, there are deeper reasons. Eternal saga with Greece continues – on 9 April, it is to pay a regular tranche to IMF, but there is still no agreement with creditors.
As expected, at today’s session, the Bank of Japan has left main characteristics of monetary policy unchanged. Yen reacted quite calmly, since surprises didn’t occur.
Today publication of minutes of FOMC last session on 17-18 March is crucial for dollar. It was at that session that “dovish” notes concerning prospects of increase in interest rates by the Fed were first expressed, what provoked sharp bounce of dollar from minimums. The market has already corrected its expectations since that, but not the fact that market’s reaction to publication of minutes will lead to the similar result. Still, it is difficult to expect minutes’ support to dollar. We remember that at that session forecasts on economic growth were lowered. We expect that today middle-term prospects of dollar will be defined by the end of the day. At this moment, European economic statistics have limited influence on market’s dynamic – euro eagerly reacts to the negative. Today the data on production orders in Germany and retail sales in the Eurozone will be published. In general, they will probably give a moderate support to euro – growth of orders is expected, and fall of retail sales will be below forecasts, if we look at similar data on Germany published last week.
Now we are still uncertain about further prospects of the market. Today’s closure in the pair EURUSD below 1.0770 will mean, from our point of view, return to descending trend, in case of closure above 1.0960 with further breakthrough of 1.1050 it will lead to the phase of correction, stronger both in terms of size and time. Such uncertainty prevents us from the entrance to the market and we stay observers at this moment.
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