Week in FX Europe – How will the EUR ever make the turn?

It’s virtually a month and a half until the ‘turn,’ or the New Year to most of us. As traders, we should expect Euro growth concerns, the fiscal cliff and Greece or Spain to dominate the reasons for most of our trading strategies. Until now, the past two months had been influenced by specific carry strategies, directed by core G10 policy makers. Long cheap EM position taking is now beginning to struggle as an outright strategy. How so? Due to the Central Bank policy of racing to weaken their own currency values the market should expect traders to shy away or close out most of the remaining carry positions.

Investors however are more concerned about the now; where the EUR, trading within striking distance of its two-month low, continues to look vulnerable, especially since Greece’s next tranche of financial aid is hanging in the balance. Greek policy makers had been banking on the Euro-finance ministers meeting next Monday to agree on releasing the next tranche of loans. The lack of clarity on how to make Greece’s massive public debt sustainable will probably delay any such announcement. It seems that Euro officials have been going out of their way to reassure the market that there will be no accidental or any other Greek default on November 16 when a large amount of treasury bills come due.

 

WEEK AHEAD

  • GBP Core Consumer Price Index
  • EUR ZEW Survey - Economic Sentiment
  • GBP BoE’s Governor King Speech
  • USD FOMC Minutes
  • EUR Consumer Price Index
  • EUR Gross Domestic Product
  • USD Consumer Price Index Ex Food & Energy

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Dean Popplewell

Dean Popplewell

Vice-President of Currency Analysis and Research at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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