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    Fall of Chinese stock market provoked euro’s growth

    Fall of Chinese stock market provoked euro’s growth
    Yesterday’s movements of the exchange market look contradictory. Another upward jump of euro is impressive. It can’t be explained by only one IFO report, which increased suddenly, contrary to expectations. The more so since durable goods orders also showed good results, appeared to be better than the boldest forecasts. Herewith most other currencies had no such speed as euro and their growth was very moderate. The most probable cause is a record fall of Chinese stock market. The common currency has long been used as funding currency and money withdrawal from securities provoked demand for euro. 
    Speaking of today’s main events, there is the first evaluation of GDP for the 2nd quarter in the U.K. Forecasts are positive and promise growth acceleration. Although it is local, still, it is able to carry the rest of the market away. It won’t have far-reaching consequences, it is difficult to expect risky moods on the threshold of FOMC session. Perhaps, moderate pressure on dollar will remain, at least, at European session. In the evening US index of consumer confidence will be published. Despite expectations of slight decrease, the indicator is still near record maximums for last seven years. Thus, such decrease is unlikely to influence market’s dynamics considerably.
    Trade tactics:
    Yesterday we opened euro’s sales from 1.1060, as we planned at the beginning of the day, stop at 1.1150 resisted. We regard yesterday’s movement as correction, however, based on current conditions we presume growth of the pair further is possible. Middle-term indicators reversed upward, and it is a bad sign for us. Therefore, we decided to exit from the market and fix the loss on current position at level 1.1060. Our evaluation of current situation needs additional analysis, so we stay out of the market now. 
    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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