Week in FX Europe – Juncker and Nowotny Staments Move Euro in Different Directions

EUR/USD has taken traders for a roller-coaster ride this week, displaying sharp movement in both directions. We have seen the pair test the 1.34 level, but also fall all the way down to the 1.3260 range. The volatility shows no sign of letting up, as the euro has coughed up some of its recent gains in the Friday European session, and is trading in the 1.3340 range. The markets were busy on Thursday, as the US released a host of key economic data. Unsurprisingly, the data was a mix, although mostly of a positive nature. Market sentiment jumped as employment and housing numbers were outstanding, hitting multi-year highs. Unemployment Claims, which had looked weak earlier in January, bounced back with its best performance in five years, dropping to 331 thousand new claims. This easily beat the forecast of 369K. Housing Starts also were outstanding, improving to 0.95 million. This beat the forecast of 0.89M, and was the indicator’s highest level since June 2008.

Earlier in the week, the euro dropped following negative remarks by Jean-Paul Juncker, only to reverse direction after another senior ECB official stated the opposite. Juncker, held of the Eurogroup, shook up the markets after bluntly warning that the “euro foreign exchange rate is dangerously high”. The markets jumped on his comments, and the euro quickly headed south, falling below the 1.33 line. On Wednesday, a member of the ECB governing council, Ewald Nowotny, weighed in, stating that the Eurozone situation had shown improvement, and the ECB was not concerned about the recent gains by the euro. These positive sentiments gave a boost to the euro, as it barreled above 1.33. Market players, scrambling to keep up with the latest comments of the day about the value of the euro, must be hoping for more action and less talk from senior ECB officials.

 

WEEK AHEAD

* JPY Bank of Japan Rate Decision
* AUD Consumer Prices Index
* JPY Bank of Japan Monthly Economic Report
* GBP Bank of England Minutes
* GBP Jobless Claims Change
* CAD Bank of Canada Rate Decision
* JPY National Consumer Price Index (YoY)
* GBP Gross Domestic Product
* CAD Bank Canada Consumer Price Index

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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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza