Vector Securities - Analytics

    Vector Securities

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    The market takes one day at a time

    The exchange market situation changes like in kaleidoscope. First, it concerns trade currencies. Euro demonstrates Olympian calm waiting for FOMC verdict. Trade currencies follow energy prices and stock markets, which volatility is high from the beginning of the year. Yesterday oil prices changed movement direction twice. If the beginning of the day passed in fall of price below 30$ per barrel against the background of talks about withdrawal of capitals from China, then later optimism appeared on news about readiness of energy exporters to negotiate on production volumes, what provoked sharp growth above 32$ per barrel. Still, late in the evening API report on US reserves returned everyone to the real world. From the morning, we have seen new attempts of growth. These fluctuations influence the exchange market too. There is no stable dynamics. The situation changes every day. 
    Today the whole attention is again on the Fed. No one expects new steps, but everyone is interested in the content of accompanying communique. The regulator oriented market players at series of increase in rates this year. However, unconfident economic growth of the U.S.A. and excessive volatility of the market make us doubt this scenario. Everyone is interested in question whether these factors and outlined slowdown of the world economy make change this basic scenario. We have no clear assumptions about it as well as about market reaction to FOMC decision. The Reserve Bank of New Zealand will announce its decision on rates following the Fed. Moreover, here everything is simple. The basic scenario – leaving rates unchanged. Still, slowdown of Chinese economy, one of main economic partners of the country, can encourage the regulator to take unexpected decision and lower rate, what will result in aggressive sales for New Zealand dollar. The same result can be reached and publication of too soft accompanying communique. 
    Trade tactics:
    Our long position in USDCAD pair was again beat out on stop. However, it ended without losses. This time technic was powerless, and our optimism on results of day closure was incorrect on the first day of the week. Sharp change of moods in energy market provoked such a result. Loonie has been too dependent on oil prices for last weeks. The right decision after it – to take a pause. 
    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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