Dollar remains under pressure till the publication of report on labor
Yesterday there were no any specific reasons for dollar’s strengthening, still, in the first half of the day there were persistent attempts to buy it. We have already noted that this movement is technical. As usual in recent times, American statistics tripped dollar again. Growth of trade balance deficit by 43 % for month is something extraordinary. Even good ISM in service sphere couldn’t improve the situation. Now for dollar all hope rests on the end of the week when the data on unemployment will be published.
The regular working day has started at Asian session with the data on unemployment in New Zealand and retail sales in Australia. The first indicator disappointed bulls on New Zealand dollar, as it was considerably below expectations, what increases chances for lowered rates by the Reserve Bank of New Zealand following the RBA. The second indicator was close to forecasts and the reaction was minimal. Actually, Australian dollar surprises us now. It has ignored increase in rates and neglects warnings about repeat of such actions by the RBA this year. Still, fundamental factors are to outweigh in the end.
After yesterday’s knock down dollar has few chances to change the situation today. In the U.S.A. the data on employment in private sector by ADP with good forecasts will be published today. However, it will hardly provoke sharp change of moods. Perhaps, even in this case dollar will get only temporary respite and players will prefer to await official report. In their turn, European currencies have reasons to develop success, though they are contradictory. In the Eurozone final data on PMI business activity in service sphere will be published. Similar reports on production activity on Monday showed slight improvement in comparison with preliminary data, what gives hopes for improvement in service sphere. Still, euro’s mood can spoil general report on retail sales. German retail sales of last week disappointed, the same will threat pan-European ones. So, euro won’t have easy way upward. On the other hand, if today Greece meets commitments and pays regular tranche to IMF, then it will support the common currency. British pound will also experience the report on business activity in service sphere. What concerns British pound, there is some nervousness on the threshold of parliamentary elections. If CIPS is weak, then pound can rapidly return to weekly minimums.
Yesterday we decided at last to reopen long position on euro after our stop had worked, when the pair fell below 1.1100. This time we opened for 1.1075, stop is again set at the entry point. Unfortunately, rollback from maximums was too strong and we weren’t ready for such development of events. Aims remain the same – the range 1.1400 – 1.1500. Still, this time we will look at levels in the range 1.1300 more carefully. If it resists, then further advancement of euro upward will be under threat and we will make decision on closure of position.
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