News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Wall Street
More View more
Real Time News
  • Join @ZabelinDimitri 's #webinar at 10:30 PM ET/2:30 AM GMT to find out how geopolitical risk will affect the markets in the week ahead. Register here:
  • “Risk off” sentiment swept Asia-Pacific markets at open as the US national security officials said that Iran and Russia have both obtained information about American voters’ registrations and are trying to influence the public about the election.
  • Next week, Thursday will offer up the US 3Q GDP, ECB rate decision and a run of FAANG earnings (Facebook, Amazon, Apple, Google) and BOJ rate decision
  • The British Pound may fall if EU and UK negotiators fail to reach a consensus as the December 31 deadline nears. The third presidential debate is on deck, how might markets react? Find out from @ZabelinDimitri here:
  • “National security officials on Wednesday announced that Iran and Russia have obtained swaths of voter registration information that could support their efforts to interfere in the 2020 presidential election” - Politico
  • Market Snapshot #SP500 and #ASX200 futures sliding lower after the US government stated that Iran and Russia have been attempting to interfere in the #USPresidentialElections2020 The risk-sensitive $AUDUSD losing ground while the 'safe haven' $JPY and $USD gain ground
  • 🇯🇵 Foreign Bond Investment (17/OCT) Actual: ¥419.8B Previous: ¥1946.5B
  • FBI to make an announcement on a ‘major election security’ issue shortly - CNBC
  • US Director Of National Intelligence Radcliffe: Identified Russia, Iran Have Taken Action To Interfere With Election
  • Heads Up:🇯🇵 Foreign Bond Investment (17/OCT) due at 23:50 GMT (15min) Previous: ¥1946.5B
Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

2012-03-06 09:50:00
Ilya Spivak, Head Strategist, APAC

Major Currencies vs. US Dollar (% change)

27 Feb 12 – 02 Feb 12

Commodity_Dollars_at_Risk_on_Growth_Fears_Euro_Eyes_ECB_Rate_Decision_body_Picture_5.png, Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

Talking Points

  • Euro Looks to ECB Rate Decision for Guidance on Future Stimulus Measures
  • Japanese Yen a Haven Once Again as Recent Losses Dull Intervention Worries
  • British Pound Likely to Look Past BOE Announcement, Focus on Risk Trends
  • Comm Dollars Highly Vulnerable as Global Slowdown Fears Take the Spotlight

Last week’s second 3-year ECB LTRO operation and semi-annual Ben Bernanke Congressional testimony produced broad-based resolution to the major sources of uncertainty in the global economic outlook. Specifically, EU banks now have a war-chest of close to €1 trillion, which is just about enough offset losses from a simultaneous default in Greece, Portugal and Spain. This meaningfully downgrades the threat of an imminent Eurozone-driven credit crisis. Meanwhile, the Fed is signaling in fairly overt terms (by its standards, anyway) that QE3 unlikely at this point.

With the Armageddon-level scenario in Europe dismissed for now and the US recovery left to its own devices, the markets were given space to return to familiar fundamental considerations as the principal guide of price action. This set the stage for the return of sustained risk aversion as investors were reminded of a consensus global GDP growth forecast that calls for the weakest performance since the world emerged from the Great Recession (according to a survey of economists polled by Bloomberg). Yesterday’s drop in China’s growth target for 2012 appears to have served as the trigger for the selloff.

Needless to say, this environment appears most damaging to overtly sentiment-driven currencies including the Australian, Canadian and New Zealand Dollars, where correlations continue to show substantial relationships with the S&P 500 (a proxy gauge for market-wide risk appetite). Rate decisions from the BOC and the RBNZ are pending, but the outcomes seem likely to mirror that of the RBA policy announcement where a restatement of the status quo merely opened the door for the resumption of risk-driven selling. The Loonie has some scope to outperform its commodity dollar counterparts considering its link to global growth trends is sensitivity to US demand, where growth is expected to accelerate this year, as opposed to China where it is not.

Turning to the Euro, the spotlight is on the ECB interest rate decision. The central bank probably won’t introduce additional stimulus only a week after the latest LTRO offering. However, traders will closely monitor President Mario Draghi’s post-announcement press conference for clues on future efforts including further refinancing operations and/or overt rate cuts, as well as their likely triggers. The Eurozone is in large part the source of investors’ dour global expectations. Taken collectively, the currency bloc is the world’s largest economy. It is widely expected to enter recession this year as heavy-handed austerity measures weigh on output, weighing down worldwide demand as a whole. With that in mind, a relatively dovish outing may weigh heavily on the single currency – where prices continue to track benchmark German bond yields – while offering a bit of support to risky assets on hopes that the region’s downturn can be made relatively less severe.

Turning to the Japanese Yen, it rapid retreat from record highs over recent weeks has surely dulled intervention fears, allowing it to attract safe-haven demand again to benefit from the current environment. As for the British Pound, the BOE rate decision is likely to be a non-event as the bank proceeds with implementing the latest QE expansion. With little else in terms of market-moving event risk on the calendar, risk trends may overtake the imitative. This is likely to put Sterling under pressure against safe havens (USD, JPY) while offering the UK currency support against sentiment-linked currencies (AUD, NZD, CAD). Its fate against the Euro is largely dependent on the degree of dovish-ness in the ECB policy announcement.


Commodity_Dollars_at_Risk_on_Growth_Fears_Euro_Eyes_ECB_Rate_Decision_body_Picture_6.png, Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

Source: Bloomberg


Commodity_Dollars_at_Risk_on_Growth_Fears_Euro_Eyes_ECB_Rate_Decision_body_Picture_7.png, Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

Source: Bloomberg


Commodity_Dollars_at_Risk_on_Growth_Fears_Euro_Eyes_ECB_Rate_Decision_body_Picture_8.png, Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

Source: Bloomberg


Commodity_Dollars_at_Risk_on_Growth_Fears_Euro_Eyes_ECB_Rate_Decision_body_Picture_9.png, Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

Source: Bloomberg


Commodity_Dollars_at_Risk_on_Growth_Fears_Euro_Eyes_ECB_Rate_Decision_body_Picture_10.png, Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

Source: Bloomberg


Commodity_Dollars_at_Risk_on_Growth_Fears_Euro_Eyes_ECB_Rate_Decision_body_Picture_11.png, Commodity Dollars at Risk on Growth Fears, Euro Eyes ECB Rate Decision

Source: Bloomberg

--- Written by Ilya Spivak, Currency Strategist for

To contact Ilya, e-mail Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.