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Investors are disappointed with American statistics

Investors are disappointed with American statistics

Now for dollar the main problem is American economic statistics. Economic indicators show contradictory results, expectations of speed-up of economic growth in the 2nd quarter aren’t met and it makes investors feel nervous. The confirmation of it is yesterday’s report on retail sales in the U.S.A. – the data were considerably worse than predicted. To be fair, we should note that the data for previous month were revised upward, what slightly softens this negative. Still, the lack of confidence by investors has already formed middle-term trend of dollar’s correction, so any negative has a painful impact on dollar. Herewith European statistics also showed mixed results yesterday. Against the background of quite good data on GDP in the Eurozone, discrepancies with forecasts on German data attract attention, and it’s not the first time. It seems that German economy, which is actually the engine of European economy, experiences increasing problems. Yesterday there were warning bells for pound too. If in general the data on unemployment were quite good, especially it concerns growth rates of wages, then quarter report of the Bank of England disappointed. Forecasts on economic growth and inflation were lowered and it highly reduces chances for increase in rates by British regulator this year. However, this negative had only short-term influence on European currencies, the significance of American statistics was higher.

In European countries news calendar is practically empty today. Some of them celebrate Ascension Day, but it isn’t a day-off, markets work. There are no drivers for strong movements. In the U.S.A. events are more diverse – producers’ prices and weekly applications for unemployment benefits. They are insignificant and surprises aren’t expected. Apparently, market’s movement will be defined by technical factors, and they give signals of short-term oversold of dollar. So, despite all negative, we can’t exclude dollar’s strengthening on profit fixation by players in the nearest future.

 

Trade tactics:

Once again, EURUSD pair is preparing to storm 1.1400. There are some chances for success, but there are also doubts about stability of further growth. The pair has been growing for the 5th week in a row, short-term indicators are again in overbought areas, respite is necessary. Above 1.1400 we will be looking for the point to exit from our long position. Herewith we aren’t going to open short positions. Now we consider probable correction only as short-term stop along the way to higher levels. If correction happens, then we will be looking for new opportunities for pair’s purchase.

 

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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