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    Mario Draghi should help to decide where to move euro


    Once again, American statistics aren’t optimistic. Yesterday inflation was below forecasts, laying of new houses fell considerably. This negative retained current tendencies in the market – fall of stock indices and energy prices leads to decrease of trade currencies and growth of yen and euro. The Bank of Canada left interest rate unchanged, what provoked sharp reaction of Loonie. However, this growth should be considered as short-term – main negative factors stay unchanged. For British pound the day was also lucky – unemployment report was better than predicted, what allowed pound to close the day with profit. For the rest, there are no changes – stabilization of stock platforms and energy prices in the second half of American session also changed moods in the exchange market – players lost interest in euro and yen, but it allowed trade currencies to strengthen.

    This day can be decisive for the common currency. Recently euro has been trapped in narrow range without clear tendency. Players can’t choose. Decline in stock markets deters euro from fall following most other currencies due to its status of funding currency, but it isn’t enough for growth now. The ECB will hardly change something in its monetary policy at this session. Everything depends on Mario Draghi again – how “dovish” his speech will be following outcomes of the session or it won’t be. We have repeatedly seen his ability to move euro to any direction. We presume that now the common currency has more potential for upward movement, but we aren’t sure.

     

    Trade tactics:

    Yesterday the decision of the Bank of Canada allowed us to regain recommended short positions in USDCAD again. We kept position not for long – we opened it for 1.4641 after the decision of the Bank of Canada and closed for 1.4460. Although Canadian dollar still has opportunities to develop correction, but the trend remains descending for Loonie. At this moment we have no new ideas. Despite sharp bounce from maximums there are no formed signals of reversal in USDCAD pair. Euro’s situation remains unclear. Now we stay out of the market.

     

    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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