Vector Securities - Analytics

    Vector Securities

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    Market’s reaction to nonfarms is surprising


    It is quite unexpected. Both figures of the report on US labor market and market’s reaction are unexpected. Certainly, we can catch at and say that not all figures of the report look good – the average length of working week and hourly pay decreased. However, main settings of the report look alright. Nevertheless, dollar failed to use this support and passed positions. Now it is unclear what is behind this movement, though in technical terms everything looks perfect after formed local bottom in EURUSD pair the day before. Still, we’d like to note that coming session of the ECB can be the reason of such reaction of the market. 
    This week there is no significant news in the U.S.A., all events are in Europe. At the beginning of the week series of economic reports from the Eurozone (production orders and industrial production in Germany, final GDP of the Eurozone for the 4th quarter) will set the tone in guessing which measures the ECB will undertake at its session on monetary policy on Thursday. It will be the main and most expected event of this week. Advances have been paid long ago, and now the question is how decisive the ECB will be in its actions towards its goals. At this moment only one thing can be said – there is a huge group of opponents of considerable widening of quantitative easing within the ECB. If the regulator’s actions do not impress investors, then euro will go upward.
    Two other regulators will hold their sessions this week – the Bank of Canada and the Reserve Bank of New Zealand. In both cases changes aren’t expected, therefore in case of surprises active reaction of corresponding currencies is assured. Speaking of local data, British industrial production is of interest – for last days pound has pushed away from the bottom, in case of weak statistics concerns about exit from the EU can return. Besides, Chinese report on inflation is also interesting, it can influence trade and stock markets considerably. Taking into account substantial influence of the situation in the stock market on some currencies, it is able to provoke strong movements in the exchange market.
     
    Trade tactics:
    On Friday EURUSD pair reached expected aims, but without us. The long position, opened in the first half of the day, was closed on stop without loss after publication of US report on labor. We didn’t dare to enter the market at lower levels again. Levels 1.1060 – 1.1080 can become next aims. To aggressive traders we recommend considering pair’s purchase at current levels 1.0980 – 1.1010 in the first half of the day with short stop at 1.0940. In case of a pair growth of more than30 points from the entry point, rearrange stop at the entry point. 
     
    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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