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The market has entered a consolidation phase

The market has entered a consolidation phase
Most currency pairs spent the beginning of the week in relatively small ranges. We consider dynamics of prices in oil market as the most notable event of previous day. If the first half of the day passed under the sign of correction after impetuous growth during last two days of previous week, then with the beginning of American session everything changed sharply. The Ministry of Energy of the U.S.A. lowered forecast on oil production for the first half of the year and OPEC representatives expressed their willingness to start negotiations with other producers to reach “fair prices”. As a result, the price for Brent reached monthly maximums. The closure above 52 is forming strong technical signal for continued growth. Trade currencies benefited most from such growth of energy prices, first of all, it was favorable for Canadian dollar, which grew sharply in the second half of the day. In its turn, Australian dollar was obviously slowing down due to concerns about coming session of the RBA.

At today’s session the regulator has left rates unchanged, but keeping the doors open for their decrease in case of necessity. Aussie reacted inactively to such decision, increasing slightly. The constraining factor is China, where PMI indices of business activity have been published today, and they appeared to be below forecasts. At morning trades Chinese stock market has lost 4.5 %, what can provoke a new wave of panic.

Although today there will be a lot of different economic statistics, still, the market can ignore most part of the data. Final production PMI of the Eurozone is unlikely to be changed considerably. The unemployment of the Eurozone is still stable, so it attracts little attention because of this stability. Thus, European statistics are in the background. In general, US production ISM can become a driver for the market in case it will be better than predicted. Forecasts on it aren’t very positive – slight decrease is expected. So, positive surprise will be a considerable support for dollar. Speaking of local events, it makes sense to pay attention to British production PMI. This week there is little statistics on the U.K. and in such cases pound often reacts actively to indices of business activity.

 

Trade tactics:

Fall of Chinese stock market, caused by negative statistics, allowed EURUSD pair to increase to 1.1270. Testing of 1.1300 seems quite achievable nearest aim. Still, coming session of FOMC will constrain speculators and further growth with return to 1.1700 is improbable. Repeat of last Monday’s panic for such short period of time is practically impossible. However, we still fear to open new positions and wait everything to calm down.

 

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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