Vector Securities - Analytics

    Vector Securities

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    The first trade day of the year has started actively

    The first workweek of new year promises to start without sway. Quite a large number of important events is able to create conditions for active trading. US report on labor certainly takes the first place. The forecast promising 200K of new work places is neutral, from our point of view. We expect that in the range 180-220K the market will react calmly to these data. Movement that is more active can be expected outside this range. Relative prosperity of labor market is no longer enough to estimate prospects of US economic growth and consequently prospects of rates of further monetary policy tightening. In this respect, of special interest are minutes of last FOMC session, at which the decision on increase in rates was made. Their publication at the middle of the week can give players new guidelines in the question of tightening rates. This week there is little economic statistics in the U.S.A. – ISM indices, trade balance and production orders. Here it makes sense to pay attention to ISM business activity. Production activity has been decreasing for half a year already and fell below 50 points, service sphere is more stable, but it is falling too. It will be difficult for dollar to continue growth at the beginning of the year, if only several indicators will give signals of economic growth. Now European statistics, in their turn, show not such poor results as many feared in the middle of last year. There are signs of stabilization. At least, dynamics of inflation and business activity indices, which will be published this week, do not give grounds for the ECB immediate interference. Besides, this week the Eurozone will publish reports on unemployment, production orders, industrial production, retail sales, trade balance. If they show that the economy has stabilized, and new flow of liquidity by the ECB is delayed, then euro will have chances for growth. 
    Today, on the first workday of the year, the focus will be mainly on production activity. The Eurozone will publish final data, which often coincide with preliminary ones, so they are not very significant. The data on inflation for December in Germany are more interesting, the forecast on them points at regular attempt of inflation to move away from minimums. If it is accurate, then it will considerably improves moods of euro bulls. Still, today final balance of power can be expected only after publication of production ISM in the U.S.A. Here it is difficult to predict something. The market will react on the fact. 
    Trade tactics:
    The fact that on the last workday of last year EURUSD pair closed below 1.0900 is a good sign for bears. Opening of trades is also in their favor. Still, it was followed by a technical rollback, which gives opportunity to renew sales. We suggest considering euro’s sales from 1.0910 – 1.0930, stop at 1.1000, with aims at 1.0830 – 1.0850. In case of a pair decrease of more than 30 points from the entry point, rearrange stop at the entry point. 
    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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