Never miss a story from Christopher Vecchio

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from Daily FX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Christopher Vecchio

You can manage you subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Talking Points:

- Highest Euro-Zone Zew Survey: Expectations since September 2009.

- Highest German ZEW Survey: Expectations since December 2009.

- BoE’s forward guidance may be working as CPI steps down.

To receive this report in your inbox every morning, sign up for Christopher’s distribution list.

INTRADAY PERFORMANCE UPDATE: 09:30 GMT

MAJORS

AUD

CAD

CHF

EUR

GBP

JPY

NZD

(vs USD)

+0.20%

+0.04%

+0.14%

+0.23%

+0.01%

-0.07%

+0.31%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.05% (-0.73% prior 5-days)

ASIA/EUROPE FOREX NEWS WRAP

The US Dollar is broadly lower following a weak start to the trading week yesterday, but price action has started to shift from favoring the New Zealand Dollar over its Australian counterpart and the Euro over the British Pound. As the trading day has marched forward, there’s been an increased interest surrounding the Euro as regional bond yields have crept higher.

Typically when European bond yields have moved up (particularly in Italy and Spain), the Euro has suffered. Today, however, yields are not increasing because investors are selling on fear; rather, improving economic growth prospects have reduced the demand for fixed income and boosted demand for riskier assets like stocks (the German DAX is holding near its all-time high set yesterday at 8626.11).

Indeed, signs of a stronger Euro-Zone are emerging, with the ZEW Surveys surging to their best outputs in four years. Here are the figures stoking Euro strength:

- Euro-Zone ZEW Survey: Expectations (SEP): 58.6 from 44.0

- German ZEW Survey: Current Situation (SEP): 30.6 versus 20.0 expected, from 18.3

- German ZEW Survey: Expectations (SEP): 49.6 versus 45.0 expected, from 42.0

Meanwhile, the British Pound is seeing a bout of weakness following the soft CPI report. The report underscores shifting consumer expectations as the Bank of England attempts to keep interest rates pointed lower. Accordingly, if data today proliferates and becomes a trend, there is scope for a short-term, fundamentally based reversal in the EURGBP.

EURUSD 5-minute Chart: September 17, 2013 Intraday

Euro_Lifted_by_Best_ZEW_Surveys_since_2009_Pound_Struggles_after_CPI_body_Picture_2.png, Euro Lifted by Best ZEW Surveys since 2009; Pound Struggles after CPI

Taking a look at European credit, higher yields across the region (especially in the core) on the back of improving economic data have lifted the Euro. The Italian 2-year note yield has decreased to 1.916% (-4.2-bps) while the Spanish 2-year note yield has increased to 1.689% (+0.5-bps). Similarly, the Italian 10-year note yield has decreased to 4.434% (-1.5-bps) while the Spanish 10-year note yield has increased to 4.407% (+0.2-bps); lower yields imply higher prices.

Read more: UK CPI, German ZEW to Spark Minor Pound, Euro Moves

ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION

Euro_Lifted_by_Best_ZEW_Surveys_since_2009_Pound_Struggles_after_CPI_body_Picture_1.png, Euro Lifted by Best ZEW Surveys since 2009; Pound Struggles after CPI

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form