Euro Bullish Ahead of Busy Trading Week
The euro saw bullish movement against most of its main currency rivals on Friday, as investor confidence in the EU economic recovery remained high after the European Central Bank left interest rates unchanged earlier in the week. This week, news out of the US and euro-zone is expected to generate significant volatility in the marketplace. Today, traders will want to pay attention to a speech from the Fed Chairman, followed by US retail sales data tomorrow, a Spanish bond auction on Thursday, and finally a US consumer sentiment report on Friday.
Economic News
Positive euro-zone growth forecasts caused the US dollar to take losses against several of its higher-yielding currency rivals on Friday, including the Swiss franc, while expectations of additional monetary easing in Japan sent the USD/JPY to a new 2 ½ year high. The USD/CHF fell close to 70 pips during European trading, eventually reaching as low as 0.9109, before closing out the week at 0.9135. The USD/JPY advanced 69 pips during the mid-day session to trade as high as 89.43 before dropping back to 89.18.
Traders can anticipate significant market volatility as a result of US economic indicators in the coming days. Specifically, a speech from Fed Chairman Bernanke today, retail sales data tomorrow, the Core CPI figure on Wednesday, Thursday’s Philly Fed Manufacturing Index and Friday’s Prelim UoM Consumer Sentiment all have the potential to boost the USD if they signal improvements in the US economy. Additionally, dollar traders will want to pay attention to news out of the euro-zone, which could generate risk taking and send the safe-haven dollar lower.
The euro saw bullish movement on Friday, as EU growth expectations, highlighted by recent comments from ECB President Draghi and the decision to leave interest rates at their current levels, supported riskier assets. The EUR/GBP gained close to 80 pips during the European session, eventually reaching as high as 0.8286, before finishing out the week at 0.8270. Against the US dollar, the common currency advanced more than 120 pips during mid-day trading to peak at 1.3365, its highest level since last April.
This week, a batch of euro-zone news has the potential to generate additional gains for the common-currency. An industrial production figure today, CPI data on Wednesday and a Spanish 10-year bond auction on Thursday are all forecasted to generate volatility for the euro. The bond auction in particular could boost confidence in the euro-zone economic recovery if there is high demand for Spanish debt, in which case the euro is likely to see bullish movement as a result.
Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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