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Week in FX Europe Jan 8-13

The Spanish Bond and Italian Bill auctions were well received this week and gave the single currency hope for at least 24-hours. However, this morning’s final Italian issues of the week have provided the market an ideal opportunity and excuse to sell the currency again. Dealers have been talking about the limited upside of the single currency and that the risk reward favors shorting the EUR. Analysts have been revising their first quarter and year end projections down to an average of 1.22 and 1.15 respectively. So far in 2012 the EUR has weakened against all G10 and major EM currencies. This weakening has been a function of ECB easing and stronger global data, which have boosted risk sensitive currencies across the board. Now we must ask ourselves, can this downward trend outright and on the crosses continue? The ECB’s easing policy has provided a massive liquidity injection (LTRO), lowered the cost of shorting the currency and encouraged the funding of risk trades using the EUR.

Below are some other highlights of the week:


EUROPE

 

AMERICAS Week in FX

ASIA Week in FX [1]

 

WEEK AHEAD

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  • Business and Economic sentiment comes to us from EUR and NZD
  • Job details are released in AUD, GBP and USD
  • BoC has its O/N rate message along with CAD press conferences
  • Inflation details are announced in CAD,USD, GBP and NZD
  • CNY delivers quarterly growth numbers
  • Manufacturing indexes are broadcasted in CNY and USD
  • Home and Building data relayed in AUD and USD
  • GBP airs its Retail Sales data

 

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.

Dean Popplewell

Dean Popplewell [6]

Vice-President of Market Analysis at MarketPulse [7]
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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