On Friday dollar bulls made a good attempt to recapture the initiative. The report on US labor gave reasons for it in spite of weak nonfarms. First of all, it was lowered unemployment level and faster growth rates of wages. These very indicators gave grounds for dollar’s purchases on Friday. Still, dollar’s strengthening in EURUSD pair was limited against opening level, as the balance of power is quite contradictory in the exchange market now. Friday’s contradictory report on labor provided hawks with arguments for further increase in rates by the Fed, still, in its turn, it has a negative influence on the stock market, which fell after the report. Active decline of the stock market supports euro, herewith it has negative affect on trade currencies. So, now we can predict slowdown of euro’s growth, but renewed large-scale growth of dollar causes doubts.
This week there is little significant statistics from the U.S.A. – there are only retail sales. However, all American statistics, whatever positive it will be, it can be overtaken by one event – the speech of the Fed head Janet Yellen in US Congress. After the series of weak data and following Dudley, Yellen can express doubts about market expectations of fourfold increase of interest rates this year. Actually, her speech can become the main driver this week. Nevertheless, even in case of neutral speech by Yellen, euro retains chances to continue growth, reasoning from forecasts on European statistics for this week. Industrial production and the first evaluation of GDP for the 4th quarter give such hope.
Considering local data, it is worth paying attention to British statistics. Exaggerated reaction of pound to outcomes of the Bank of England session and the report on US labor can give place to the similar movement in the opposite direction in case of positive data. The lack of news from China during the week due to holidays can give a respite to trade currencies and their volatility will fall.
Friday’s rollback of euro from maximums makes us cautious. It is difficult to say whether it will result in something more, up to the upper boundary of the range about 1.0950 – 1.1000, which the pair left last week, or everything will be limited by this movement. Taking into account that the point of our entry into the market is at comfortable distance from current levels, now our choice is to keep the position and wait. As before, stop is at the entry point.
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