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    Dollar reacted calmly to FOMC minutes

    Dollar reacted calmly to FOMC minutes

    Long consolidation during the whole previous day ended with dollar’s growth after publication of FOMC minutes. These minutes are moderately soft, and they didn’t bring any surprises. Dollar has “digested” the entire negative for past three weeks after FOMC session. Still, dollar’s strengthening started shortly before this event – comments of the NY Fed head Dudley supported dollar. Although his speech can be called contradictory, still, he spoke quite definitely for increase in rates this year.

    Once again, dollar is on the path of growth, and there are few chances to stop it. What concerns American statistics for today, there are practically only weekly applications for unemployment benefits. It is difficult to imagine even with what they may scare dollar bulls after last report on labor. Limited data from the U.S.A. this week plays in favor of dollar – opponents have to prove their worth, but they have problems with it. German economy, which is actually the engine of the Eurozone, has started to glitch more and more often.  Today in Germany trade and payment balances, and besides, industrial production will be published. And if trade balance is still alright – lower resource prices and increased competitiveness due to decreased rate of euro allow to maintain high surplus, then some problems can appear with payment balance because of capital outflow. There is even less certainty with industrial production. For last two months production orders have fallen, so it can influence the production.

    Speaking of local events, we’d like to highlight publication of report on foreign trade of the U.K. and the Bank of England session on monetary policy. In general, news background isn’t very favorable for pound. There is no indication of an improvement of trade balance, despite lower resource prices and chances for increase in rates by the Bank of England are shrinking by the day.

     

    Trade tactics:

    From our point of view, EURUSD pair is again targeted at previous minimums in the range 1.0500, the interim goal is at 1.0710. But this time movement will hardly be so rapid and non-recoil. So, the issue of stops will be of high importance – too close location of them will cause frequent losses. Today we consider pair’s sale from 1.0790 – 1.0810, stop at 1.0900, the initial aim is at 1.0700 – 1.0720. In case of a pair decrease of more than 30 points from the entry point, rearrange stop at the entry point.

     

    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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