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The market is still nervous, but it gradually settles down

The market is still nervous, but it gradually settles down
The market is gradually calming down. On the last day of the week markets were calmer. S&P500 daily range was only about 20 points, returning to usual values. But then for the second day in a row there was an active closure of short positions in energy market – price for Brent oil exceeded 50 dollars for some time, what had a positive effect on trade currencies. In general, dollar retained its advantage due to European currencies yesterday. German inflation was slightly better than predicted, but it did little to euro. Retained positive moods in stock and raw platforms emboldened speculators and give them appetite for risk. Euro returned to the status of fund currency.

Traditionally first week of the month is eventful. As usual, US report on labor at the end of the week is of the first importance. The situation remains stable in labor market. After series of quite positive American statistics, the issue of increase in rates at September session can appear on the agenda again. Still, unemployment data aren’t enough to make a decision on interest rates and Janet Yellen has repeatedly mentioned it. Besides unemployment, there are also production orders, trade balance and ISM indices of business activity in the U.S.A. The most uncertain situation is with ISM. According to forecasts, these indices are expected to decrease slightly. However, against the background of sharp growth of Index of consumer confidence last week, it is quite possible that ISM will be better than predicted. Publication of “Beige Book” is also of interest, it is the last one before FOMC session. The evaluation of economic state and prospects can give some clues about how close the Fed is to actions. In general, the situation is favorable for dollar in the short term.

In the Eurozone the focus is on the ECB session on monetary policy. Here the situation has slightly stabilized, Greek issue is put on reserve, but there are no successes in economic growth yet. The regulator can take a respite after impetuous growth of euro wasn’t developed last week, still, those problems remain and new ones appear. The issue of influx of refugees makes authorities of European countries feel nervous and attempts to find a decision face amorphous political institutes. However, this problem is political, negative consequences are extended in time. Market’s focus will be on Draghi’s press conference, or to be more precise, whether there will be indications of widening of assets buying-out by the ECB in the nearest future.

Speaking of local events of this week, the RBA session is of most interest. Last week Australian dollar practically ignored euro’s rally, decline in energy prices and fall of stock markets were negative for it. Nevertheless, in this regard current drivers influenced it and euro in an opposite phase. Everyone expects at least one more decrease of rates by the RBA, though it isn’t expected at the nearest session. In this case some growth of Australian dollar can be expected, still, much will depend on accompanying comments on outcomes of the session.

The week has started with new concerns at Asian platforms – after correction during last days of previous week, stock indices are falling again. Futures for American indices are also in red zone. Currencies’ reaction is standard – euro is growing, trade currencies are decreasing. However, these movements are calmer in contrast to previous Monday and they are more li8ke fading fluctuations. Today British banks are closed because of holiday. So, the day is likely to pass in consolidation. The more so since, crucial events aren’t expected today.


Trade tactics:

In EURUSD pair probable range for today is 1.1170 – 1.1290. If the pair can’t close above 1.1300, then decreasing pressure on euro will remain. Now we prefer to stay out of the market and wait for calmer state.


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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