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
EUR/USD
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
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Bearish
GBP/USD
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
USD/JPY
Bearish
More View more
Real Time News
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.00% Gold: -2.17% Silver: -8.68% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/5abU7hof5c
  • Poll: Many are weighing their market convictions today, so it is worth running a poll. Do you think the break lower today from the S&P 500, global indices, emg markets, carry and other 'risk' assets is the start of a lasting bear wave (ie a weeks long and -10%-plus rout)?
  • #Gold technical support zone discussed in today's webinar catching the lows. . . $XAUUSD - https://t.co/4s1mlKp2rr https://t.co/vZYjrSVNJZ
  • RT @USCBO: By the end of 2020, federal debt held by the public is projected to equal 98% of GDP. The projected budget deficits would boost…
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.33%, while traders in NZD/USD are at opposite extremes with 66.21%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/6wPYEEd6ni
  • US Dollar drives higher as market sentiment and liquidity conditions deteriorate further. Get your $USD market update from @RichDvorakFX here: https://t.co/5ldnNrMj7e https://t.co/GWtgHwH71m
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: France 40: 0.69% Germany 30: 0.66% FTSE 100: 0.49% US 500: -2.09% Wall Street: -2.78% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/YVW1rqCX8O
  • #Gold fell roughly -2.5% Monday morning as markets awoke to a surge in volatility. Get your $XAUUSD market update from @PeterHanksFX here: https://t.co/RR62qDzpnu https://t.co/zkUfxyuDTM
  • Update on #Cryptocurrencies #BITCOIN -4.23% #BITCOINCASH -5.17% #ETHEREUM -8.13% #RIPPLE -5.96% #LITECOIN -7.77%
  • RT @NYFedResearch: New data from the July SCE Labor Market Survey show a marked rise in transitions into unemployment. https://t.co/bYB5f5y…
Euro Forecast: Revisions to GDP Data to Underscore Weakening Environment

Euro Forecast: Revisions to GDP Data to Underscore Weakening Environment

2019-02-10 16:30:00
Christopher Vecchio, CFA, Senior Strategist
Share:
Euro Forecast: Revisions to GDP Data to Underscore Weakening Environment

Fundamental Forecast for the Euro: Neutral

- The Euro ended the week in the middle of the pack again, and there was a clear ‘risk off’ tone to the week given that EURCHF, EURJPY, and EURUSD were the worst performers.

- The first revisions to the Q4’18 German and Eurozone GDP reports should show a greater slowdown in growth than initially measured.

- The IG Client Sentiment Indexshows that traders continue to increase their long EUR/USD positioning as prices hit fresh monthly lows.

See our long-term forecasts for the Euro and other major currencies with the DailyFX Trading Guides.

The Euro had another run-of-the-mill week, gaining ground against three currencies, while losing ground against the other four. A breakdown of the various EUR-crosses showcases a clear shift in risk appetite. EURUSD was the worst performing pair, dropping by -1.17%, followed by EURJPY at -0.96%. Meanwhile, the Euro’s best performance came against the Australian and New Zealand Dollars (EURAUD +1.09%; EURNZD +1.17%). That the three safe haven currencies were the top performers and the three commodity currencies were the worst performers should be a warning sign, one that portends of potentially more weakness to come in risk-correlated, high beta assets.

Revisions to GDP Data to Showcase Weakening Environment

One of the main drivers of Euro weakness in recent weeks has been the widening gap between the European Central Bank’s growth expectations and how actual data have materialized. The coming week’s top economic data releases should further underscore the need for the ECB to keep its extraordinary monetary stimulus in place, despite the Governing Council’s best laid plans to raise rates by sometime around “summer 2019.”

The revision to Q4’18 German GDP is due to show that the Eurozone’s largest economy only grew by +0.8% in 2019, down from the +1.1% rate initially reported. A significant decline in the German reading should weigh down the Q4’18 Eurozone GDP reading, which first checked in at +1.2% (y/y). After last week’s economic figures, the Citi Economic Surprise Index remained deep in the red at -80.1, down from -77.3 at the end of last week, and only slightly higher than where it was one month ago at -88.6.

Brexit, Trade Wars, US Government Shutdown All in Play

While most of the EUR-complex has been trading largely along the lines of global risk dynamics – the safe haven crosses and commodity crosses are moving in opposite directions – two pairs are still under the sway of significant exogenous influences that could cause them to decouple. EURGBP, of course, continues to be guided by Brexit (and for that matter, all of the GBP-crosses are in the same boat). Any single development that materially changes the odds of a no deal, ‘hard Brexit’ will dictate outcomes for EURGBP, regardless of whatever is happening with Eurozone economic data. Elsewhere, EURUSD brief reprieve away from US political influences is now over, with another US government shutdown possible at the end of the week and the deadline for the US-China trade war détente in three weeks.

Euro Weakness Mirrors Decline in Inflation Expectations

Market-measures of inflation expectations remain under significant pressure, which have historically – and currently – been glove-in-hand with a more difficult trading environment for the Euro. The 5-year, 5-year inflation swap forwards (ECB President Mario Draghi’s preferred market-measure) finished last week at 1.440%, a fresh 52-week low. To this end, this measure of inflation peaked in January 2018 at 1.774%. Between the underwhelming GDP figures and ongoing deterioration in inflation expectations, it’s seems if it’s only a matter of time before the ECB takes on a more dovish tone.

Positioning Data Being Released Once More, but Still On a Delay

The US government shutdown from December 23 to January 25 is still having an impact on the release schedule for the CFTC’s COT report. As such, the CFTC’s COT report released on Friday was for the week ended January 8, and it showed that speculators had decreased their net-short Euro positions to 40.5K contracts from 58.5K net-short contracts reported for the December 25 period. The CFTC’s COT report is still not a reliable source of positioning at present time; instead, traders may want to look to the IG Client Sentiment Index.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX.

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

DISCLOSURES