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Technical Analysis for 09/09/2016

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Technical Analysis for 09/09/2016

Technical Analysis for 09/09/2016
September 09
09:00 2016



During the day, we should expect the development of the side trend. On the one hand, the euro can go to Figure12 due to the correction in the cross-rate EUR / GBP on the background of the positive macroeconomic statistics from the UK, as well as the demand for risky assets. The European Central Bank made the euro the funding currency in 2015 by conducting the ultra soft monetary policy. However, despite the high liquidity and zero interest rates, carry-traders don’t actively use the single currency in their transactions. This information is supported by the statements of banks-market makers. As before, they consider that the Japanese yen is the most attractive currency with two decades of well-functioning mechanism of funding. Perhaps, the euro will also be very sensitive to the dynamics of risky assets in the future, but now this impact is not too large. However, this effect is present, and it will play against the single currency. On the other hand, on the eve the black gold showed the growth by more than 3.5% after the Statistics from the United States, which in turn can cause a decrease in the USDX rate and will support the euro and lead to the growth of the pair on Figure 13. The yield differential on the 10-year US and German government bonds is being decreased, which reduces the attractiveness of investing in US assets.

Against this background, during the day we can expect the flat within the range of 1,1220-1,1320.




During the last two trading days the British pound has been adjusting after the week strengthening and current levels look attractive for building Buy positions. In the midst of the European trading session, the National Statistics Office will publish the release on the trade balance for August, where we can expect the release of positive data due to the fall of the British currency against the value of the euro and the dollar. The competitiveness of British products in foreign markets due to the reduction in price of the currency is increasing. The positive trend is confirmed by the growth of foreign exchange reserves of the Bank of England for July by 0.22 billion dollars. The reserves are growing either during the export growth period or during the period of the fall of imports. In any case, this process causes a decrease in the negative trade balance. In the credit markets, the yield on the 10-year government bonds has been growing over the past six trading days in a row in relation to their counterparts from the US and Germany, indicating the growth of pound quotations. You cannot ignore the yesterday’s release on the US crude oil inventories: the weekly inventories have fallen by 14.5 million barrels that has been the highest level over the last 17 years. Quotations of the black gold showed the rapid growth, which, in turn, should support the British currency.

Against this background, during the day Buy positions on the reduction of quotations should be opened within 1.3310 / 1.3280 and it is preferable to take profit at the level of 1.3400.




The growth of “risk appetite” at the financial markets will contribute to the strengthening of the pair USD / JPY throughout the trading day. On Thursday, oil has become the main troublemaker on the market, namely the report on stocks in the United States: oil and gasoline stocks have declined, and we can see the decrease in the volume of the production by 30 thousand barrels / day, up to the level of 8.45 million barrels / day. It should be noted that the volume of the production from the third player on the world market (after Saudi Arabia and Russia) has been declining for two consecutive trading weeks. It has become an unexpected surprise for the investors, as the United States are increasing the number of drilling platforms, which traditionally contributes to the increase in the volume of hydrocarbon production. Due to these surprises, traders began to increase long positions on risky assets. It should also be noted that on the eve the paper of the banking sector became the leader of the growth at the European stock market. The financial industry of the Old World is facing serious difficulties and if investors buy shares of troubled banks, so they are willing to risk. Such dynamics is traditionally negative for the yen as a funding currency№1 in the carry trade operations.

Against this background, during the day Buy position on the reduction of quotations should be opened within 102.05 / 101.75 and it is preferable to take profit at the level of 102.55.

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