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.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Mixed
USD/JPY
Bearish
Gold
Bearish
Oil - US Crude
Bullish
Bitcoin
Bullish
More View more
Real Time News
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.26% US 500: 0.21% Wall Street: 0.20% France 40: 0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/FuBeDSt9EZ
  • Can you trade with the joy of missing out (#JOMO)? Find out how you can turn your #FOMOintrading to JOMO here: https://t.co/G5H26NXZQe https://t.co/1qjacaayxC
  • Very excellent article by my colleague @DavidCottleFX talking about India's banking system as credit growth chugs along at its slowest pace in over 20 years. Learn more about why the Indian Rupee is vulnerable below! $USDINR #Rupee https://t.co/xnHVPw2azs
  • As #China faces #trade conflict, internal unrest and slowing growth, democratic #India should be ripening as an investment destination. But its mired #banking sector will continue to weigh on growth, confidence and the #Rupee. https://www.dailyfx.com/forex/market_alert/2019/10/22/Indian-Rupee-Will-Struggle-Along-With-Indias-Troubled-Bank-Sector-.html?utm_source=Twitter&utm_medium=Cottle&utm_campaign=twr
  • My trading video for today: '$GBPUSD Outlook Disputed By #Brexit Risks and Traders, EURUSD An FX Nexus' https://www.dailyfx.com/forex/video/daily_news_report/2019/10/22/GBPUSD-Outlook-Disputed-By-Brexit-Risks-and-Traders-EURUSD-An-FX-Nexus.html?utm_source=Twitter&utm_medium=Kicklighter&utm_campaign=twr
  • The gold-silver ratio is simple. It is the number of silver ounces you would need to trade to receive one ounce of #gold at current market prices. Find out how you can use this in your trading strategy here:https://t.co/kh5DZvduqD #CommoditieswithDailyFX $XAUUSD https://t.co/MmS9VdmQmP
  • The $JPY is overwhelmingly in the grip of fundamental and macro action, but $USDJPY charts show the pair in a fascinating spot. Get your market update from @DavidCottleFX here:https://t.co/nD8RuyzvGG https://t.co/uAp5lVBVsN
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.02% Gold: -0.04% Silver: -0.15% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/owUiiLQFGA
  • Since early February, the economic news flow from Australia has been increasingly out-performing relative to economists’ expectations – Citi. #AUD
  • Polls are suggesting Canadian Prime Minister Justin Trudeau is set to secure a second term, though he may not be able to command an outright majority and will have to rely on other parties to govern - BBG #CanadianDollar #CAD #CanadaElection2019
EUR Softer Ahead of ECB, IFO Figures Continue to Show Weakness

EUR Softer Ahead of ECB, IFO Figures Continue to Show Weakness

2019-07-25 08:30:00
Daniela Sabin Hathorn, Junior Analyst
Share:

Talking Points:

  • Weaker IFO figures reinforce a slowing German economy suggested by weaker than expected PMIs
  • German bond yields at their lowest level on record as investor expectations worsen
  • EURUSD continues to head towards two-year lows of 1.1076 ahead of ECB rate decision meeting

Join our analyst Nick Cawley for live coverage of the ECB rate decision meeting at 1130 GMT

The Eurozone continues to show weakness as business confidence in Germany suffers another blow. The common currency was feeling the heat of the rate decision this morning as it traded lower against most G10 currencies.

EURUSD May Break Through Critical Support After ECB Rate Decision

EURUSD was trading mostly unchanged heading into the European open but the Euro bears managed to regain control and pushed the pair close to the 1.1128 support line in anticipation of German IFO figures to be released, ahead of the ECB rate decision meeting. EURGBP was losing some of the gains it had been steadily making since the beginning of May, but this was partly due to a rebound in sterling (GBP) as traders continue to digest the news about Boris Johnson’s election as PM. The pair was trading at month-lows of 0.8920 at the start of the session.

Business climate in Germany for the month of July was 95.7 well below expectations of 97.0, and down from the previous month’s figure of 97.4. Current sentiment continues to show weakness in the Germany economy falling below 100 to 99.4, whilst future expectations were down to 95.7. These lacklustre figures come on the back of weakening PMI figures released yesterday, where manufacturing PMI continued to fall further below the 50 line, falling two points from 45.0 to 43.1, hitting an 84-month low amidst fears that slowing growth and trade disruption could push the country into a recession. The economic boom seen in the last ten years has come to an end leading into a sideways movement that could result in a downturn.

German Bund yields are trading at their lowest level ever, with the latest round of 10-year bonds offering a yield of minus 0.38%, down from minus 0.24% in June. The lowering yields come amid fears of a global economic slowdown which has been pushing prices of highly rated bonds higher, meaning that investors who purchase these bonds and hold them to maturity are likely to make a loss. Bond prices have been soaring in the last few months on the back of expectations that the ECB would reintroduce monetary stimulus coupled with a host of negative data from Germany, which has kept bond yields heading lower.

EUR Softer Ahead of ECB, IFO Figures Continue to Show Weakness

All four PMIs across the Eurozone failed to reach expectations, signalling one of the weakest expansions in recent years, and giving up the mild gains seen in the month of June. The case for a rate cut from the ECB is strengthening but it is unlikely that a cut will come in today’s meeting, with expectations that Mario Draghi will announce the terms of a new round of QE, cementing the basis for a 10 bps cut to come in September if economic conditions do not improve.

Recommended Reading

Eurozone Debt Crisis: How to Trade Future Disasters – Martin Essex, MSTA, Analyst and Editor

KEY TRADING RESOURCES:

--- Written by Daniela Sabin Hathorn, Junior Analyst

To contact Daniela, email her at Daniela.Sabin@ig.com

Follow Daniela on Twitter @HathornSabin

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

DISCLOSURES

News & Analysis at your fingertips.