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.

0

Notifications

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

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Low
High
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
Wall Street
Bearish
Low
High
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
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • RT @KyleR_IG: The Aussie 10Y yield: surely this thing has to break lower at some point, especially with bullish sentiment cooling off in gl…
  • Bitcoin struggled to maintain a push into record highs and appears to be vulnerable to a near-term pullback. Litecoin and Ethereum saw more aggressive gains, will their momentum accelerate? Find out from @ddubrovskyFX here:https://t.co/f5d7qs5j3z https://t.co/dhLJjkQEnx
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Gold: 0.12% Silver: 0.05% Oil - US Crude: -1.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/fb0rTb7U02
  • RT @BrendanFaganFx: AUD/USD Mixed as Retail Sales Surpass Expectations $AUD $USD Link: https://www.dailyfx.com/forex/market_alert/2021/04/21/AUDUSD-Mixed-as-Retail-Sales-Surpass-Expectations.html
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.16% 🇨🇦CAD: 0.05% 🇳🇿NZD: 0.02% 🇪🇺EUR: 0.01% 🇬🇧GBP: 0.00% 🇦🇺AUD: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/KHYBRYg6wf
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 93.46%, while traders in Wall Street are at opposite extremes with 66.19%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/VNFQudLmfc
  • #USDZAR looking incredibly interesting after breaching the neckline of a Double Top pattern A short-term bounce could be at hand but if 14.50 remains intact, a more extended push lower seems likely in the coming weeks $USDZAR https://t.co/1rHgmX4zyB
  • RT @KyleR_IG: "Retail sales rose 1.4 per cent in March" https://t.co/aM9vXo5s49 #ausbiz
  • 🇦🇺 Retail Sales MoM Prel (MAR) Actual: 1.4% Expected: 1% Previous: -0.8% https://www.dailyfx.com/economic-calendar#2021-04-21
  • 🇦🇺 Westpac Leading Index MoM (MAR) Actual: 0.38% Previous: 0.16% https://www.dailyfx.com/economic-calendar#2021-04-21
Euro Outlook Somber as COVID-19 Threatens EU Corporate Debt

Euro Outlook Somber as COVID-19 Threatens EU Corporate Debt

Dimitri Zabelin, Analyst

Euro Outlook, EUR/USD Forecast, Corporate Debt, Leveraged Loans – Talking Points

  • Euro may fall if COVID-19 continues to pressure corporate debt
  • Concern about financial stability may inflame ECB rate cut bets
  • EUR/GBP on edge of support resistance at 0.8389 – what next?

ASIA-PACIFIC RECAP: STOCKS, SOUTH KOREAN WON NURSES LOSSES

Global equity markets appear to be mounting what could be the early stages of a recovery after experiencing two days of intense selling pressure. S&P 500 futures spiked approximately one percent in Tuesday’s trading session with the South Korean Won gaining despite a growing number of cases both domestically and internationally. The source of renewed risk appetite may have originated from news of Japan confirming the test of an anti-flu drug on coronavirus patients.

EURO AT RISK FROM FRAGILE EUROZONE CORPORATE DEBT

On Monday, the Euro Stoxx 50 index plunged 3.5 percent, while the cost of insuring sub-investment grade corporate entities surged to its highest level since October. The spread on credit default swaps for Mediterranean sovereign debt also rose, particularly in Italy where the government has shut down 10 towns in an effort to stop the spread of COVID-19.

Chart showing Euro Stoxx 50

Policymakers are growing increasingly concerned about the durability of corporate debt in a downturn and whether it could spark a cross-continental contagion effect. In the Eurozone, the appeal of so-called leveraged loans and their high-yielding features made them particularly attractive in a low interest rate environment. Consequently, investors have begun to gain exposure to increasingly higher yielding and riskier assets.

This came amid a regional convergence of interest rates on sovereign debt in Greece, Germany, Italy Portugal and Spain. What this means is the risk premium between owning Mediterranean debt – with a history economic precarity – and German bunds – with a reputation of financial soundness – has collapsed and is approaching equivalency. But why is that important?

10-Year Yields on German, Spanish, Greek, Portuguese and Italian Sovereign Debt

Chart showing German bond yields

This implicit message behind this convergence is investors are assuming that “all other things equal”, these states will be almost equally able to meet their debt obligations. History says otherwise, and the current fundamental context only supports the notion that the Southern member states are still comparatively more vulnerable than their northern counterparts.

However, buoyant market optimism – buttressed by expectations of central bank easing – has alleviated the anxiety of a region-wide default. Consequently, investors have grown more comfortable with investing in riskier assets (both sovereign and corporate) while underwriting standards for the latter deteriorate. The coronavirus has revealed that these debt markets are more susceptible to economic shocks than imagined.

EUR/GBP FORECAST

EUR/GBP has bounced back from the swing-low at 0.8297 and is now testing its strength as it wrestles with resistance at 0.8389. If the pair is able to surmount the ceiling, it opens the door to retesting resistance at 0.8533 where the EUR/GBP failed to clear it back in early February. However, if the pair is unable to clear the near-term barrier, it may leave discouraged traders in the dust and cause a retreat to 0.8297.

EUR/GBP – Daily Chart

Chart showing EUR/GBP

EUR/GBP chart created using TradingView

EURO TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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

DISCLOSURES