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    GDP for the 1st quarter knocked dollar down, the Fed didn’t support

    GDP for the 1st quarter knocked dollar down, the Fed didn’t support

    Yesterday the data on GDP for the 1st quarter knocked dollar down finally. Growth of GDP by 0.2 % appeared to be worse than the most pessimistic forecast. To all appearances, dollar bulls surrendered after this – EURUSD pair easily overcame resistance at 1.1050 and grew to 1.1186. Outcomes of FOMC session provoked dollar’s rollback from daily minimums on almost all currencies. Still, this rollback shouldn’t be overestimated, it was caused by technical reasons – by the moment of publication of communiqué dollar was strongly oversold at short-term periods. The Fed didn’t say anything new to support dollar. The regulator noted slowed economic growth and confirmed again that statistics would guide its actions. The decision on increase in rates isn't made and there are no exact dates. There can be talk of entering protracted phase of correction by dollar after breakthrough of almost all significant levels.

    After previous day, which was full of events, it is difficult to attach great importance to today’s economic statistics. First of all, the market will react to the data, which coincide with moods, prevailing yesterday. In this regard, European statistics are of more interest today. The data on retail sales and unemployment of Germany can provide additional incentives for continuation of euro’s growth. Forecasts on it are optimistic. What concerns preliminary data on inflation in the Eurozone, the market reacted quite indifferently to similar German data yesterday. Apparently, this indicator isn’t in the focus of the market now. Today American economic statistics aren’t significant enough to provoke radical changes. Personal incomes and expenses and weekly applications for unemployment benefits aren’t indicators, which receive heightened attention. Dollar is to close the month with the strongest decrease for last 5 years.

     

    Trade tactics:

    In the short term dollar is slightly oversold, still correction will hardly be long. Today we suggest looking for the point for EURUSD purchase in the range 1.1080 – 1.1100, stop at 1.0980 with aims at 1.1220 – 1.1240. In case of a pair growth 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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