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
  • What is seasonal change in volatility. Are we going through one right now? Find out:
  • The US Dollar will be bracing for a cascade of political risks including the first presidential debate, ongoing stimulus talks, the Supreme Court vacancy against the backdrop of key employment data. Get your #currencies update from @ZabelinDimitri here:
  • The Indian Rupee may be at risk to the US Dollar as USD/INR attempts to refocus to the upside. This is as the Nifty 50, India’s benchmark stock index, could fall further. Get your $USDINR market update from @ddubrovskyFX here:
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out:
  • Weakness in equity markets continued last week as losses built and technical patterns hint further bearishness might be ahead. Get your #equities update from @PeterHanksFX here:
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here:
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here:
  • #Gold prices succumbed to selling pressure as the US Dollar soared this past week What is #XAUUSD facing these next few days and can these fundamental forces extend its selloff? Check out my outlook here -
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here:
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here:
Euro Acting like a Funding Currency, Only Hitch is Friday's EZ Data

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

2015-08-09 23:45:00
Christopher Vecchio, CFA, Senior Strategist
Euro Acting like a Funding Currency, Only Hitch is Friday's EZ Data

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. -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.