10, November 2014

Fundamental analysis

EUR/USD (a 4-hour chart)

The last week ended with the dollar strengthening against its competitors in the financial markets. The ECB and the Bank of England monetary policy decision that was announced on Thursday, met our forecasts, the changes were not made, but the market reacted to these results by the dollar large-scale buying. Obviously, the investors regarded the BoE inactivity as the fears acknowledgement that the UK economic recovery had slowed down; there is a risk to return the downtrend and in these circumstances, the regulator does not intend to tighten the policy.

As for the ECB, the signaling point for the market was the M. Draghi’s press conference that reaffirmed the European Central Bank decision to increase the quantitative easing volumes.

The US economic data were scarce, but they were on the dollar side - the initial jobless claims fell immediately by 10 thousand last week while we expected the data would be significantly less positive, only two thousand. This information could also support the dollar as to some extent it added confidence that the coming labor report would note good results. According to our forecasts the employment statistics will announce its growth by 233/230 thousand of work places in the US non-agricultural sector and the US unemployment rate retention at the level of 5.9%. If the fact does not meet our expectations for the worst, the dollar demand will remain at the high level.