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Technical analysis for the 08/09/2016

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Technical analysis for the 08/09/2016

Technical analysis for the 08/09/2016
September 08
09:00 2016

EUR / USD – Euro US Dollar

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The main event of the day will become the publication of the results of the ECB meeting on the monetary policy. Since the last meeting of the monetary regulator (21 July) the yield of 2-year government bonds of Germany, which is closely correlated with the ECB discount rate, has reduced by 0.05%. On the one hand, it is a slight decrease, and it is difficult to make a conclusion about the prospects for the change in the monetary policy. On the other hand, we are seeing the same decline, which indicates that the market is being adjusted to the new incentives from the ECB in the autumn. Inflation expectations in the Old World are still at a low level, primarily due to the sharp fall in the producer price index. The bank lending shows the positive dynamics and in the case of new incentives we will see a strong growth rate, which will have a positive impact on the economy. Will the ECB introduce today new measures that eventually cause a depreciation of the euro? In my opinion, no, it won’t. The ECB is traditionally characterized by slowness in decision-making and today Mario Draghi may declare once again that the regulator is ready for further steps if it is necessary. And now we have to wait and closely monitor the statistics. Nevertheless, the world’s leading investments banks are expecting new stimulus measures from the ECB before the end of this year and will actively offer their clients to short the euro.

The increased pessimism about the European assets is visible on the debt market: the yield of 10-year German government bonds is being reduced in relation to their counterparts in the US and the UK.

GBP / USD – British Pound Dollar

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During the day the pair can demonstrate the growth against the background of the positive dynamics in the credit and commodity markets. The yield of 10-year UK government bonds is still growing in relation to their counterparts from the United States and Germany that increases the attractiveness of investments in British assets. On Wednesday the members of the leadership of the Bank of England Carney and Forbes said that the situation after the Brexit announcement was controlled by the regulator and new stimulus measures, which were introduced in August, must help the British economy. On the eve the American Petroleum Institute reported about the reduction of oil reserves by 12 million barrels.  Taking into account the strong correlation of this indicator with the data from the Ministry of Energy, today we can see a positive release, which will contribute to the growth of quotations of the main reference varieties and will support the British currency.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 1.3330 / 1.3300 and it is preferable to record profits at the level of 1.3400.

USD / JPY – US Dollar Japanese Yen

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During the day we should expect the moderate growth of quotations on the background of a “risk appetite” increase of investors. On Wednesday the majority of stock markets in the world have closed the bidding in the “green zone”. The MICEX index has set a new historical maximum again. The growth of euphoria is associated with positive corporate reports and falling yields on securities of the debt market. In this regard we can conclude that investors are willing to build long positions on shares, which will contribute to the growth of the operations volume called carry trade. Despite the weak macroeconomic data from the United States, Index S & P500 is still turned to update the historical maximum and this trend will have a positive impact on the value of the pair USD / JPY.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 101.60 / 103.20 and it is preferable to record profits at the level of 102.20.

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