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    Euphoria from reduced oil supply disappeared, stock market slowed down


    Yesterday trades passed without notable movements. From our point of view, the most interesting movement was in EURUSD pair. The pair has technically approached the support at 1.1060 – 1.1070, but failed to break it through from the first time. If today supports resists, then preconditions for reversal will be formed. Yesterday doubts about the possibility of reaching agreements on oil. Saudi Arabia announced its unwillingness to reduce production. Although it doesn’t go beyond preliminary agreements, but such statement highlights instability of reached agreement. As a result, oil prices went down again, and were followed by the stock market. 
    Today the report on US inflation will become the main event. For last week, there were several reports, which point at slight improvement of American economy. The forecast on inflation also points at moderate speedup of growth rates of prices. Our attitude towards it is ambiguous. On one hand, it will signal closeness of aims, which the Fed strives to achieve and growth of chances for increase in rates. On the other hand, it can be painfully perceived by the stock market, for which increase in rates isn’t the best option. In this case, trade currencies will fall, but opportunities for euro’s growth will appear. Still, in case of weak data the stick market can fall, what will indicate continued uncertainty in American economy. We find it difficult to estimate market’s reaction to inflation data today.
    Considering local data, British retail sales and Canadian inflation and retail sales are of most interest. In the first case, economy takes the second place – everyone is focused on negotiations on conditions of retaining British membership in the EU. In the second case, short-term local reaction to actual figures is possible, but the main dependence is still the same – oil prices and the stock market.
     
    Trade tactics:
    Yesterday first technical signal appeared, indicating probable change of tendency of last days in EURUSD pair. First, support at 1.1060 resisted, secondly, the pair closed above 1.1100. Asian stock indices opened in red area, what can become support for euro. Today we are going to open long positions again. This time the moment for entry will be breakthrough of yesterday’s maximums at 1.1150, stop at 1.1060. We see initial aims in the sequence 1.1190 – 1.1220. 
     
    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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