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. See our updated Privacy Policy here.

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
More View more
Real Time News
  • Gold Price Forecast: XAU Coil Continues After 1800 Res Rejection https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2021/10/19/Gold-Price-Forecast-XAU-Coil-Continues-After-1800-Res-Rejection.html $GC_F $Gold https://t.co/D6hRSB5vNx
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 1.09% 🇦🇺AUD: 0.80% 🇬🇧GBP: 0.51% 🇪🇺EUR: 0.23% 🇨🇦CAD: 0.08% 🇯🇵JPY: 0.05% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/vguzKnWbkt
  • This was not the pair that I expected to make the most of leveraging the Dollar's pullback. $USDCNH puts in a sheering bearish break on the biggest single day drop in 5 months: https://t.co/sKFWOqVhNZ
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: US 500: 0.47% Wall Street: 0.34% Germany 30: 0.17% FTSE 100: -0.02% France 40: -0.30% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/SOuNRfF9cI
  • Heads Up:🇺🇸 Fed Daly Speech due at 15:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-10-19
  • Heads Up:🇩🇪 Bundesbank Mauderer Speech due at 15:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-10-19
  • ECB's Lane - Market may not have fully absorbed forward guidance $EUR
  • AUD/USD extends the advance from the start of the month as the Reserve Bank of Australia (RBA) Minutes warn of rising home prices. Get your $AUDUSD market update from @DavidJSong here:https://t.co/FfADz5RGNo https://t.co/PfJAdSL2iO
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Silver: 3.69% Gold: 0.66% Oil - US Crude: -0.35% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Gay35tIWLB
  • I'm seeing the reports that Powell sold significant stock holdings while the market was tumbling. I am not sure of the particular criteria involved for central bankers' transactions, but it boosts my confidence in his competency...
Euro May Outperform AUD, NZD, Sideways vs GBP, USD on Mixed Data

Euro May Outperform AUD, NZD, Sideways vs GBP, USD on Mixed Data

Christopher Vecchio, CFA, Senior Strategist
Euro_May_Outperform_AUD_NZD_Sideways_vs_GBP_USD_on_Mixed_Data_body_Picture_1.png, Euro May Outperform AUD, NZD, Sideways vs GBP, USD on Mixed Data

Fundamental Forecast for Euro: Bullish

- The Euro’s pullback midweek may have been the time to go long.

- Price and time cycles point to the EURUSD hitting a near-term top shortly…

- …but the Euro has benefited from the recent turmoil in the commodity currencies.

The Euro’s resilience in the wake of the European Central Bank’s surprise 25-bps rate cut continued this past week, finishing only -0.44% behind the top performer of the week, the Swiss Franc, while boasting a +2.43% return against the worst performer, the Australian Dollar. If one thing was clear, it was that investors were in high demand for European currencies over the past five days. Consider that of the ten major currencies, five gained versus the US Dollar, and all were from Europe (vs USD): CHF +0.90%; SEK +0.83%; NOK +0.82%; GBP +0.67%; and EUR +0.46%.

It’s becoming more and more evident that, absent a further deterioration in data, negativity regarding the European continent has been priced in. It should be considered a positive sign for the Euro that non-Euro using countries are seeing their currencies appreciate as alongside; it speaks well to market participant’s outlook on the entire region’s growth.

The gains across Europe this week are even more unambiguous when illuminated by the fact that the Federal Reserve’s October meeting Minutes very much left open the possibility of a QE3 taper in December contingent on “improving data.” With the meeting having occurred before the October NFP figures were available, it is very likely that we’ve seen a major data point move in favor of a December taper given how handily the headline beat expectations. If QE3 taper expectations start to gather – and there was evidence this week as the US yield curve steepened – it will be difficult for the Euro to keep grinding out only modest gains against the US Dollar.

The Euro may still benefit elsewhere, however, as was seen this week. The commodity currencies hemorrhaged ground across the board from late-Wednesday through Friday’s close (thanks to the Fed), and there was clear evidence of a rotation out of the higher yielding currencies into lower yielding but growth-friendly currencies – the European bloc.

Recent data and policy signals out of Europe this past week were far from soothing for Euro bulls. On one end, French and broader Euro-Zone PMI figures were rather tepid, and speculation arose (briefly) that the ECB would consider cutting its main rate into negativity territory. On the other, German PMIs improved, the German IFO survey improved, and ECB President Mario Draghi rebutted the notion of negative deposit rates. There are both positives and negatives, but for now, the positives seem to be edging out and it is looking like that the ECB will keep policy unchanged at its December meeting.

This coming week, there are only a few important events on the calendar, and with a holiday in the US that will cut liquidity out by Wednesday, diminished market participation rates might buffer reactions to any incoming data. Of note, German labor market data for November is due on Thursday, which could see a further steadying in light of the IFO survey.

But the big data prints are the inflation readings for Germany and the Euro-Zone. The ECB cut its key rate earlier this month after October’s figures showed deflation in Germany and a post-crisis low in inflation in the Euro-Zone. Should these figures show even modest improvement after the dip at the start of the 4Q’13, the Euro may see its strength extend from the commodity bloc to some more of its resilient rivals over the past few weeks, the British Pound and the US Dollar, as the calendar turns to the last month of the year. –CV

To receive reports from this analyst, sign up for Christopher’s distribution list.

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

DISCLOSURES