On Friday, under the lack of significant events, the market followed the path of self-fulfilling forecasts. Everyone is waiting for further growth of dollar on the threshold of decisions by main regulators, market players didn’t resist such moods. For the first time from March, dollar’s index closed above 100.00 and is near to renewing annual maximums.
The lull that we have seen in exchange market recently is apparently close to its end. Long-awaited events are on the agenda. The first one will happen this week – the ECB session on monetary policy. Most market players are targeted at further weakening of monetary policy by the ECB. The upcoming session can limit itself to decreasing deposit rate by 10 basic points, but it is unlikely to ring relief to the common currency. Players can think that the regulator leaves the door opened for other steps in the future, particularly for increase in volumes of assets buying-out. So, from our point of view, the ECB decision won’t become a signal for the end of current trend. Still, the movement won’t be linear. This week is practically the first work week of the month, and is traditionally rich in economic reports. We’d like to name only main ones – the report on US labor market, inflation in the Eurozone, business activity in the Eurozone, the U.S.A., the U.K., China; retail sales in Germany, sessions on monetary policy the Reserve Bank of Australia and the Bank of Canada, housing market in the U.S.A. These are strong drivers, which are able to strengthen market’s volatility. This week one unknown factor will disappear – the ECB will announce its decision. The next is the Fed. Dollar continues to grow, still, we should be ready to serious correction. Dollar’s purchase is risky without protective orders.
This week will start with preliminary data on inflation for November in Germany and incomplete deals on houses sales in the U.S.A. Here it makes sense to pay attention to German inflation. Forecasts are mainly set to moderate growth of prices. In this case, some rollback of dollar is possible, but nothing serious can be expected before the ECB session this week.
On Friday we didn’t keep long our short sale of euro, which was recommended for opening – the pair’s inability to break through the range 1.0560 – 1.0570 made us leave the market. Keeping short positions for long involves risk of correction. Still, as before, we don’t see grounds for pair’s purchases. Once again, we are out of the market, looking for new points for entry.
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