Subscribe to RSS

Euro Acting like a Funding Currency, Only Hitch is Friday’s EZ Data

EURUSD

Fundamental Forecast for Euro: Neutral

– EURUSD stood on weak ground ahead of Friday's July US NFP report, but the USDOLLAR Index was unable to break out of its three-week bull flag.

– August forex seasonality favors a slightly weaker EURUSD.

– Have a bullish (or bearish) bias on the Euro, but don’t know which pair to use? Use a Euro currency basket.

It was a mixed performance last week for the Euro, and there’s little reason to believe that investors will be swayed from their current biases over the next few days. Now that the first week of the month has passed, the major data releases for July have already come to light, allowing for ‘bigger picture’ themes to take hold.

In the near-term, that means the market will grapple with expectations about various central banks’ paces of easing – or lack thereof. EURUSD dipped back under $1.0900 last week only to close lower overall by -0.17% at $1.0962, as a late-week slip in equity markets sparked demand for safety and liquidity. With US-EZ yield differentials moving wider in favor of a stronger US Dollar the past few weeks, the Euro is once again fulfilling the role as a funding currency.

This evolution for the Euro in the wake of the heightened Greek debt crisis was best illustrated by EURAUD last week, which fell by -3.71% to A$1.4475 by Friday’s close. On Tuesday, the Reserve Bank of Australia made it clear that it was no longer carrying the belief that the Australian Dollar needed to undergo a major devaluation; and with AU-EZ yield differentials widening out, EURAUD suffered greatly. The low yields underpinning the Euro mean that shifts in differentials can have an amplified impact.

If the Euro is to continue to embrace its early-2015 role – that as a funding currency that moves inversely with equity markets, and tends to follow yields – then economic data in the near-term may not matter that much. After all, the European Central Bank remains on course with its QE program, and with the buffer that it has had to provide to Greece via the ELA, it’s highly unlikely that the ECB does anything in the near-term to upset only recently-calmed credit markets.

If the Euro were to be impacted by economic data this week, it would need to be “high” ranked event risk at minimum. This week, there’s only one wrinkle to an otherwise soft economic release schedule: the Q2’15 Euro-Zone GDP report set to be released on Friday. If there were any reports that could materially alter the ECB’s outlook, it would be the GDP and CPI reports. With economists forecasting an uptick in growth for the region last quarter, there is a chance that improved growth expectations filter into higher inflation expectations. If yields move up as a result of fixed income traders shuffling their capital for higher real turns (adjusted for inflation), the Euro will probably catch a big higher as well.

Beyond the end of week growth report, there’s not much to look forward to on the calendar. Indeed, there are many “medium” ranked events due out of the next few days for the Euro-Zone; but the current environment isn’t one that is necessarily sensitive to these types of releases. We’re just outside of the refractory period post-Greece, and the last weeks of August typically bring about lower participation rates in markets as market participants try and squeeze out a few more vacation days before the end of the summer. As such, we’ll be looking to cues outside of the domestic Euro-Zone area for catalysts in the EUR-crosses, in particular, the impact of shifting rate expectations on EURUSD in the run-up to the Federal Reserve’s September policy meeting.

0 commentsback to post

Add your comment

Nickname:
E-mail:
Website:
Comment:

Other articlesgo to homepage

$25 Free Welcome Trading Gift to Start Trading – TRADE

$25 Free Welcome Trading Gift to Start Trading – TRADE(0)

Sign up and receive $25 Free Trading Welcome Gift to Start Forex Trading. $25 Free Forex Welcome Trading Gift by TRADE.com to trade forex live trading without any Deposit and investment to verify live account Link:  $25 Free Welcome Gift to Start Trading Available to: All new trading account Bonus offer: Sign up and receive

Stay Informed About Crucial BREXIT News – UFX Broker

Stay Informed About Crucial BREXIT News – UFX Broker(0)

How will BREXIT affect the value of the GBP? Could the EUR be affected, as well? Other European markets may see volatile market reactions as investors wonder how the UK may profit from its own market, rather than remain part of the EU’s single market. Stay Informed About Crucial BREXIT News with UFX Link:  Stay

Up to 444% Profit Receive for a Single Trade – Grand Capital

Up to 444% Profit Receive for a Single Trade – Grand Capital(0)

Up to 444% Receive Profit with our new Express Options for Grand Capital Ltd Binary Option Broker. Make a correct prediction for 3 assets at the same time Link: Up to 444% Profit Receive for a single trade Link:  $500 Forex No Deposit Welcome Bonus Link:  40% Forex Welcome Deposit Bonus Available to: All new

$6000 First Deposit Bonus Limited Time Offer – XTrade

$6000 First Deposit Bonus Limited Time Offer – XTrade(0)

Up to $6000 First Deposit Bonus Limited Time Offer (T&C applied) on all Deposits for all Customers. Become an XTrade customer, and get 60% Forex Special bonuses (T&C applied) on all deposits made during your first 7 days!! Link:  $50 Free Cash Welcome Bonus Promotion  (T&C applied) Link:  $30 Free Account Verification Bonus (T&C applied) Link: 

50% Deposit Bonus and $50 No Deposit Bonus – FortFs

50% Deposit Bonus and $50 No Deposit Bonus – FortFs(0)

$50 Forex No Deposit Bonus Promo Action to all eligible clients. Every client who passed the verification process in their trader’s room can get the $50 No Deposit Welcome Bonus Link:  $50 Forex No Deposit Welcome Bonus Link:  Up to 50% Bonus of Every Deposit Link:  15% Support Margin Bonus Promo Available to: New and

15% Forex Welcome Deposit Bonus Up to $1000 – XM

15% Forex Welcome Deposit Bonus Up to $1000 – XM(0)

15% Forex Welcome Deposit Bonus Up to $1000 and $30 Forex No Deposit Bonus Welcome Bonus brings Real Account clients the best rewards available. Entering the markets and trading with XM enables you to earn from your trades and build your own bonus up to a maximum of $1,000. Link:  $30 Forex No Deposit Bonus

Free $200 Earn with Binary No Deposit Bonus – Ayrex

Free $200 Earn with Binary No Deposit Bonus – Ayrex(0)

Earn $200 Free with Binary Options No Deposit Bonus to all new activated trading account. Ayrex presents its very first Binary Options No Deposit Bonus for new traders. Sign up to get FREE $30 and turn them into a fully withdrawable $200! Link: $200 Earn with No Deposit Bonus Link:  $100 Free Win in Just One

$30 Free No Deposit Welcome Bonus Campaign – Tickmill

$30 Free No Deposit Welcome Bonus Campaign – Tickmill(0)

$30 Free No Deposit Welcome Bonus Campaign to All new traders. $30 Free Welcome Account is available to all new clients who expressed a wish for it during the registration process. Link:  $30 Free Welcome Bonus Offer Available to: All new traders Ending Date: 31 December 2017 Bonus Offer: $30 Free No Deposit Welcome Bonus

Get $2017 No Deposit Hot Bonus Promotion – FreshForex

Get $2017 No Deposit Hot Bonus Promotion – FreshForex(0)

$2017 No Deposit Hot Forex Bonus Offer to all new verified customers. The $2017 Hot No Deposit Forex Bonus offers you a unique opportunity to test trading strategies of FreshForex Link:  $2017 No Deposit Hot Bonus offers Available to: All New Traders. Ending Date: 30 April 2017 Bonus Offer: $2017 No Deposit Exclusive Hot Bonus

100% Real Money Cash Back Bonus Promotion – UFX

100% Real Money Cash Back Bonus Promotion – UFX(0)

100% Real Money CashBack Promotion 2018 to all new and existing clients. Join and gain exclusive access to the ONLY online trading 100% Cashback rewards bonus program Link:  100% Real Money CashBack Promotion Link:  $50 Forex No Deposit Bonus Promotion Available to: All new trading account Ending Date: 31 December 2017 Bonus offer: 100% Real

read more

Forex Featured Broker

Contacts and information

ForexDepositNews.com Forex Deposit Bonus, Forex No Deposit Bonus, Forex Live Contest, Forex Demo Contest, Free Forex Bonus Forex Brokers Review and Other All Forex promotions.

ForexDepositNews.com

Social networks

Most popular categories