Today the focus is on nonfarm payrolls
Yesterday in the exchange market, the main movement passed in EURUSD pair. The pair approached 1.1400 and after it profit fixation started. There were several reasons for it: regular sharp growth of German government bond yield (it is growing more than one day already, but players’ overstrained nerves gave way, what influenced adjacent markets – both exchange and stock markets), technical factors in the form of overbought, psychological – the intention to fix profit before American report on unemployment. The data on weekly applications for unemployment benefits gave dollar strength – they were considerably better than predicted, what gives hope for improvement of unemployment indicators. British pound also distinguished itself yesterday. Late in the evening it started growing on rumors about favorable result of voting for conservatives, and when official preliminary results were published, the pair jumped with gap. According to them, it turns out that David Cameron and his party can retain the majority in the parliament. Such scenario would give the U.K. an opportunity to avoid political instability when forming government.
Today the focus of attention is on official monthly report on labor in the U.S.A. Until recently, it was practically the only one indicator, constantly showing improvement in US economy. Last month is was the first time over a long period there was an alarm bell when growth rates of new work places decreased sharply. Today’s report is to show whether it is caused by season factors or reasons that are more serious. The market is laid on recovery of labor market and growth of new work places above 200K. If growth is again less than 150K, then it will be a heavy blow for dollar, which will be able to worsen short-term prospects of American currency. We should just remind that this indicator is known for its unpredictability.
We retain our long position in EURUSD pair, the pair couldn’t overcome 1.1400, and we decided not to close our position. Herewith regular deep correction withdrew technical indicators from overbought areas. At this moment, we have no forecasts on further movement direction, they are fully dependent on American data today. In case of return above 1.1350, euro’s prospects will improve considerably and the range 1.1400 – 1.1500 won’t look as an insurmountable obstacle in the middle term. In this case, we recommend not hurry with closure of long positions.
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