Winning a frontline but losing another

After more than 16 hours of discussions in the Belarussian capital Minsk, Germany, France, Russia and Ukraine agreed to a ceasefire deal. It’s still not clear what Russia receives because it wasn’t mentioned by officials, but we can infer that it gets the eastern part of Ukraine as the frontier seems to have been moved. The boundary is drawn between areas seized by separatists and the rest of Ukraine. On the other side, Petro Poroshenko managed to receive a funding package worth 40 billion dollars, which will be active for four years.

EURUSD touched the 1.1438 local maximum and seems determined to move forward as the Greece problem may soon be resolved. Even if discussions yesterday were lacking a positive result, these will be resumed on Monday. Until then, as a sign of friendship, the E.U. decided to extend the emergency lending assistance program (ELA) to 65 billion euros.

On the other side of the continent, Sweden’s central bank decided to join a strong stimulating monetary policy. Thereby, they’ve decided to cut the main interest rate into negative territory to   -0.10% for the first time and announced a bond-buying program that would buy government bonds worth 10 billion Swedish krona.

Under these circumstances, the German Index DAX levitates around historical highs wanting to mark new levels once the 11000 resistance zone is overcome.

The price of oil receives a slap from the American rising inventories, but it quickly lifts off the ground and now is rushing to local peaks. This morning’s positive gap is due to the sink of the American dollar and the deeper industry spending cuts. Market participants continue to believe in a long term descending scenario, but for now we can only look at the peaks.

After exceeding the 120 resistance level, the USDJPY currency pair started a pretty healthy correction. Initially the American dollar was gaining ground on the base that the Fed will soon raise the interest rate, but eventually the U.S. dollar depreciated because of bad news from the labor market (Unemployment Claims rose to 304k) and the sales sector (Retail Sales decreased to -0.8% and Core Retail Sales went down to -0.9%). The yen strengthened as one of the BoJ officials hints that any additional stimulus will be “counterproductive”. A breakdown of 118.50 would trigger a move of depreciation to the 118 or even 117.70 support level while a return over 119.40 could make a possible shift to the upward trend.

Yesterday’s star was definitely the GBPUSD currency pair which rose up to the 1.5400 resistance level. This scenario is clearly due to the governor of BoE speech. He admitted that the rate of price growth will drop below zero in the coming months, but eventually will recover as the output growth remains solid and domestic demand growth robust. He is confident that the next move in terms of monetary policy decisions will be to raise the interest rate. This announcement may have reversed the descending trend, but we should also wait for more technical signals.