Vector Securities - Analytics

    Vector Securities

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    The market has suddenly revived


    The trend of dollar’s growth was under threat. Yesterday it got blow after publication of US economic statistics, which were weaker than expected. Business activity decreased sharply, though it stays above 50 points. Taking into account that production ISM has stayed below 50 points for three months already, there are higher risks of further economic slowdown in the 1st quarter. It can provoke the revision of the Fed initial plans on normalization of monetary policy this year. Nerves of dollar bulls broke and American currency passed its positions against almost all currencies yesterday. Besides, in the middle of American session the head of NY Federal Reserve Bank Dudley expressed his doubts about the necessity of further increase of rates by the Fed.

    Today statistics are not as defining for the market (there is little of it) as speeches of heads of main regulators – Draghi and Carney. If Draghi raises the issue of new incentives in March again, then euro’s exit from the range upward can be false. The situation of British pound is similar. Today quarter report on inflation is to be published. Carney’s soft estimation of inflation prospects in the U.K. can become an obstacle for continued growth of pound. The bank of England session on monetary policy, which is scheduled for today, will hardly lead to serious consequences – changes are unlikely. Positive news isn’t expected for dollar today – the forecast on production orders is weak. If today the market confirms yesterday’s dynamics, then dollar’s decrease can get more solid development in the short term.

     

    Trade tactics:

    Our yesterday’s proposal for opening of long position in EURUSD pair was correct. At this moment stop is set at the entry point. Technically the reserve is formed for continuation of growth. There are some concerns about strong bounce from reached maximums. Today speech of Mario Draghi is a risk factor today. However, to aggressive traders we recommend keeping euro’s purchases. Further aims are in the range 1.1240 – 1.1260.

     

    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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