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Technical Analysis for 16/09/2016

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Technical Analysis for 16/09/2016

Technical Analysis for 16/09/2016
September 16
12:18 2016



A mixed background is being formed at present. On the one hand, it is possible to open Buy positions on the background of negative macroeconomic statistics from the US. The industrial production in the US fell by 0.4% m / m in August. The negative dynamics of the balance of payment in the USA in the second quarter has increased by 7.1% y / y to the level of 119.9. The negative balance has been above the level of 100 billion dollars over the last seven consecutive quarters. Last time such a situation was observed in the period of 2011-2012, which ultimately led to a gradual devaluation of the US currency over the next year and a half. Will this story be repeated this time? In my opinion, it will take place after the presidential elections in 2017. On the other hand, the growth of the “risk appetite” will put pressure on the euro as a funding currency. On the eve the European and American stock markets finished the trading in the “green zone”. The high-yield cross-rates have also showed the growth of quotations. The investors are increasing positions regarding the carry trade, which usually has a bad effect on the value of the euro.

Against this background, during the day we can expect the flat within the range of 1.1210 -1.1290.



Traders are buying British currency, as a favorable background is being formed. Firstly, on the eve the macroeconomic data from the United States went worse than it was expected. These data don’t let count on increasing of the key rate by the Fed next week. The bond market has reacted to this event quite naturally: the yield on 10-year bonds of the UK has been increasing relative to the counterparts from the United States. Secondly, the report on retail sales in the United Kingdom has pleased investors with the positive data: the volume of sales has increased by 6.2% y / y, while the market expected the level of 5.4% y / y. The growth in consumer spending will increase the GDP. Thirdly, on the eve the Bank of England noted the positive effects of the monetary softening in August as well as the fall of the British currency. There were no conversations on the interest rate cut, which is also positive for the pound. Then, the stabilization on the commodity market also leaves bears without a strong support. On Thursday the prices of basic commodity assets showed the strong growth, which in its turn will put pressure on the dollar since the raw material is quoted in the US currency.

Against this background, during the day Buy positions on the reduction of quotations should be opened in the area of 1.3220 / 1.3180 and it is preferable to take profit at the level of 1.3300.



Current levels are attractive to open Buy positions for two reasons. Firstly, macroeconomic statistics in the USA, which was published on the eve, indicates that today we will not see the strong inflation data for August. In its turn it puts a bullet in the issue of raising the Fed’s interest rates at the meeting on 21 September. As a result of August the producer price index, which shows early signs of inflationary trends, was at zero in annual terms, while retail sales decreased by 0.3% m / m during the last summer month. Since the expectations of changes in the Fed monetary policy are leveled, then the stock markets get a positive portion and, therefore, we can expect the recovery of quotations on the world’s leading stock markets. The increase in “risk appetite” will positively affect the pair USD / JPY. Secondly, the spread widening of the yield on 10-year US and Japanese government bonds is being observed at the credit market, which increases the attractiveness of the investment in the US assets. Investors expect the rate cut from the Bank of Japan at the meeting on 21 September, which does not allow the yen to strengthen too much against its rival.

Against this background, during the day Buy positions on the reduction of quotations should be opened in the area of 102.10 / 101.70 and it is preferable to take profit at the level of 102.70.

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