Vector Securities - Analytics

    Vector Securities

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    Dollar lost its status of the favorite and is actively sold

    Yesterday Draghi failed to scare euro’s buyers considerably, and the pair continued storming new annual maximums. He said nothing new, repeating previous statements about the ECB readiness to act if it is necessary. However, there is a whole month until next session of the ECB on monetary policy and market players are not impressed by his speech now. The more so since US economic statistics continue to disappoint us – both weekly applications for unemployment benefits and production orders were weak yesterday. Now dollar has no reasons to recapture the initiative in its favor. The outcomes of the Bank of England session have slightly slowed down the rally of British pound. Results of voting on increase in rates bring some disappointment – the MPC members unanimously vote against (at last session one voice was “for”). Still, it is probably a short-term respite and it is too early to talk about the end of current rally now. 
    The first workweek of the month traditionally finished with the report on US labor. It should be said that the month has actively started – the market has awakened from some kind of dream, he has been in for almost two last months. During all this time, the common currency has been at the periphery of market players and fluctuated in quite narrow range for such period, other currencies attracted attention. Against the background of doubts about further steps by the Fed on continuation of monetary policy tightening this year, dollar has passed its positions this week. Today there is a question whether the data on labor can ruin this scepticism. We have doubts about it. Such variant is possible only in case of strong data on unemployment, what has been rare for last years after strong previous report. This time forecasts point at growth of new work places in the range 200K, what is quite good, but won't become a significant support for dollar. In this case slight correction is possible after two previous days, still it will hardly change market moods radically. The data below 170K will become unpleasant news for dollar
    Trade tactics:
    At this moment choice of euro’s long positions is quite simple – to fix profit or continue keeping positions. After publication of the data on US labor, market can show any reaction, not without reason the report is known for its unpredictability. Our technical indicators give signals in favor of further growth of euro. We tend to stay in the market. We count on the pair’s growth to the range 1.1360 – 1.1380.
    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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