Vector Securities - Analytics

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    FOMC minutes made dollar bulls cautious

    Consolidation is the thing to which the market devoted the most part of previous day. There are weak producers’ prices and quite good PMI business activity in the Eurozone. Good ADP and trade balance, weak production orders and ISM in service sphere in the U.S.A. For European currencies, such mix led to stalling in narrow ranges. The common currency was the only one to leave this mess after publication of FOMC minutes. The reference in these minutes to negative influence of strong dollar on the economy made start partial fixation of euro’s short positions. Herewith pressure on trade currencies remains due to continued fall in commodity prices. Stock indices are falling rapidly – this day trades have been stopped again in China due to drop of more than 7 %, herewith yuan has reached five-year minimums. In general, the exchange market isn’t very active, but it is still ahead. 
    Today there is mainly European news – production orders in Germany, retail sales, unemployment and European mood indices in the Eurozone as a whole. Forecasts are moderately positive. However, it will hardly worsen attitude towards dollar. From our point of view, market players will prefer to await US report on labor before make the decision. In this respect particular attention can be paid to last weekly data on applications for unemployment benefits. Together with ADP report, published the day before, they can indirectly preface figures of official report, though there is no full correlation.
    Trade tactics:
    Our attempt to enter the market, opening short positions in EURUSD pair from 1.0753, came to nothing yesterday. The market allowed making protection, which worked after unsuccessful attempts of bears to break down through the range 1.0710 – 1.0720. FOMC minutes changed players’ moods. Breakthrough above 1.0800 at Asian session limits bears’ opportunities in the short term. Today we expect return to the range 1.0700 – 1.0800, still, we prefer to make a pause and watch development of events. 
    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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