Vector Securities - Analytics

    Vector Securities

    377.25 5.25/10
    73% of positive reviews
    Real

    The Bank of Japan has surprised us today


    Dollar was unlucky again. Durable goods orders were very weak. The lack of certainty about further increase in rates in the U.S.A. make investors take wait-and-see stand. Contradictory factors save dollar from collapse, they influence dynamics of various currencies differently. Although the common currency grew following results of the day, still, this growth was retained by weak data on German inflation and increase of stock market. Trade currencies actively respond to energy prices and almost completely repeat their dynamics. Yesterday readiness to meet with representatives of oil-producing countries expressed by Russian representatives, provoked sharp growth of prices above 35$, they were followed by trade currencies. Actually, yesterday only dynamics of British pound was defined by inner reasons, what was due to the data on GDP for the4th quarter, which were better than predicted. Herewith general moods aren’t in favor of dollar. 
    The last workday of the month has started with news from Japan. After publication of huge set of statistics, the Bank of Japan released its decision on current monetary policy. Statistics were weak on almost all main indicators, which were published today. Still, it was not a great surprise. However, Japanese regulator surprised us. Showing decisiveness, it announced introduction of negative interest rates. Yen dived sharply on this news. Still, it is a question whether it will be enough to restrain growth of Japanese currency. Its increase is caused by return of capitals from abroad against the background world economic instability and it will be difficult for the regulator to slow down this process. It is possible that the regulator will have to use additional incentives in the nearest future.
    The other part of the day will be also restless. Euro will be waiting for the data on German retail sales and inflation of the Eurozone as a whole. In the first case, most forecasts are quite optimistic, but the indicator wasn’t stable last year. The forecast on inflation looks paradoxical, where slight growth is expected in annual terms. Still, it can be put down on the effect of the base. Monthly inflation is unlikely to be better than predicted after yesterday’s weak inflation on Germany. It seems that it won’t become a serious negative for euro. After FOMC session the market isn't so categoric about the Fed decisiveness to follow aggressive policy this year. The more so since US economic statistics still show weakness. Yesterday it was durable goods orders, today it is the first evaluation of GDP for the 4th quarter in annual terms, where sharp slowdown of growth rates is expected. Such state implies retaining of current "status quo" - active movement of trade currencies and limited fluctuation of euro in the range.
    Considering local data, we'd like to pay attention to the data on Canadian GDP. Taking into account high volatility of Loonie this month, the reaction to the data is expected to be active too. The pair is near to "feeling" the bottom in current correction phase.
     
    Trade tactics:
    As before, we have no clear view of euro’s nearest prospects, so we refrain from trading with this pair now. Herewith we are watching USDCAD with interest. The pair is approaching monthly minimums and minimum of this year at 1.3820 – 1.3830, which can become a good support and an obstacle for continued correction. We will look for opportunities for opening long positions below 1.3900.
     
    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. 

    To leave a comment you must or Join us


    By visiting our website and services, you agree to the conditions of use of cookies. Learn more
    I agree