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Technical Analysis for 13/09/2016

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Technical Analysis for 13/09/2016

Technical Analysis for 13/09/2016
September 13
09:00 2016

EUR / USD – Euro US Dollar

Today we can expect a moderate quotations growth of the single European currency for two reasons. Firstly, we can expect the data release on the ZEW index, which is better than expected against the background of the business activity growth in the euro zone’s leading economy. The moderately positive dynamics of the PMI index from Markit suggests the continued economic growth. Also, it can be concluded that the representatives of the German business have already taken into account the UK withdrawal from the EU, as the previous release of the ZEW was very weak. The only thing that causes the concern is a reduction in the growth rate of Germany’s trade balance surplus over the first seven months by 0.6% y / y. Secondly, today we can expect the release of the moderately negative data on the inflation in the UK in August, which in its turn will cause the quotations growth of the EUR / GBP cross rate and have a positive impact on the value of the euro against the dollar.

Against this background during the day Buy positions on the reduction of quotations should be opened within 1.1215 / 1.1185 and it is preferable to take profit at the level of 1.1255.

GBP / USD – British Pound Dollar

In my opinion, today the British currency will show a decrease in quotations on the background of the moderately negative inflation data. Today’s consensus forecast of economists at investment banks suggests the rise in consumer prices by 0.4% compared with July, which seems difficult to achieve amid the gasoline prices decrease by 2% m / m. All in all, the gasoline price on Foggy Albion has fallen by 10.5% to the level of $ 1.44 / liter for the summer period. Energy carriers are an important component of the inflation and, in this regard, it is difficult to count on the strong data release today. It is impossible to ignore the slowdown in the wage growth. This slowdown as well as results of Brexit may cause a decrease in the consumer activity and force the companies to postpone the increase in prices. The consumer confidence index has been in the negative area for the last five months, namely at a minimum level for the last two and a half years. Also, the growth of pessimism about the UK assets in the credit markets should be noted: the yield on 10-year UK government bonds is being reduced against their counterparts from the US and Germany.

Against this background during the day Sell positions on the growth of quotations should be opened within 1.3360 / 1.3400 and it is preferable to take profit at the level of 1.3280.

USD / JPY – US Dollar Japanese Yen

“Roller coaster” in the US stock market has surprised the investors. It is difficult to understand the upward trend that was the day before: was it buying up of risky assets after a severe correction or a deep correction? Can we expect a new wave of sales of stocks around the world and the capital relocation to safe assets to which the Japanese yen is traditionally referred? A negative release on the business sentiment index (BSI) for large Japanese companies can be expected during the Asian session. This may cause the decrease in quotations on the Tokyo Stock Exchange and the strengthening of the yen as the funding currency in carry trade operations. Index PMI of the manufacturing sector has been below 50% for over 6 months, indicating a significant decline in this sector of the economy. Corporate profits are declining in annual terms, primarily at the expense of the decrease in the competitiveness of Japanese products in foreign markets because of the strengthening of the national currency. The exchange rate of the yen against the dollar has strengthened at 15.33% since the beginning of this year, which jeopardizes high rates of the GDP growth and inflation. “Appetite for risk” will determine the trading course with the opening of the European trading session. It means if stocks DAX30 and FTSE100show a strong growth in the first two hours of the session, the pair will also go up, otherwise it will accelerate the fall of the pair.

Against this background during the day Sell positions on the growth of quotations should be opened in the area of 102.10 / 102.50 and it is preferable to take profit at the level of 101.50.

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