Vector Securities - Analytics

    Vector Securities

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    The common currency grew sharply without obvious reasons

    By the end of the week, the exchange market has intensified, herewith without any hint of logic in these movements. There is practically no correlation. If growth of Japanese yen can be explained against the background of avoiding risks caused by geopolitical tension in view of test of hydrogen bomb by DPRK, then active growth of euro is difficult to justify. Most other main currencies ignored this growth. British pound is obviously reluctant to grow. Weakness of trade currencies due to continued fall in energy prices is more understandable. During nearest days this mess will be adjusted.   
    This day informational background divides the day into two parts. European session is full of European news. Industrial production, trade and balance payments in some European countries (first, Germany is of interest) are able to give impetus for growth of European currency. This very currency shows greatest desire to develop correction impulse. Forecasts on European indicators are also positive. Payment and trade balances have traditionally shown good results for recent years. So, opportunities for testing of annual maximums remain. British pound is in more complicated situation. The revision of expectations of increase in interest rate by the Bank of England for a later date this year facilitated increased pressure on pound, bounce from minimums is difficult for it. Today the U.K. will release the data on trade balance, which has been deficient for last years. So, even some improvement of indicators is a poor consolation. Still, in case of a greater correction of dollar, pound will follow the rest of the market anyway. At American session the focus is on one event – US report on labor market. There are conditions for more substantial correction of dollar in the market, so it needs considerable support to cancel this scenario – the level of new work places at 220K and above, herewith growth of wages is desirable too. Within limits 180-220K the result can be called neutral and against the background of other contradictory economic indicators the scenario of dollar’s correction can be developed.
    Trade tactics:
    Yesterday in the first half of the day, EURUSD pair tried to return to the range 1.0700 – 1.0800, but failed to stay there. For the remaining time players were actively buying euro. In technical terms, the scenario isn’t so unexpected, such option was possible after FOMC minutes. Still, weak correlation with the rest of the market makes us cautious. So, we prefer to stay out of the game now. 
    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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