Week in FX Europe – The EURO Has Not Stumbled, It’s Fallen Hard

The EUR has been hurt more by the LRTO2 payback schedule letdown rather than any event risk concerns that could possible transpire with this weekend’s Italian election outcome. The next wave of the EUR correction lower may have begun now that a smaller percentage of Euro banks have confirmed a reduced repayment schedule. Coupled with a plethora of Euro negative data this week has managed to punish the single currency and shave off close to –2% from its midweek point.

The reduced nominal repayment amount has so far succeeded in creating a negative perception for the fledgling currency. Bund yield changes are doing the same thing, especially around the 2-year bucket (+0.125%) were German yields have plummeted when compared with 2’s in the US (+0.25%). It was only last month that German similar maturities were trading at a premium to their US counterparts. The dynamics are swiftly changing for the EUR. Trading below 1.31 by early next week is a distinct possibility!



* NZD Reserve Bank of New Zealand 2-Year Inflation Expectation
* USD Consumer Confidence
* USD Fed’s Bernanke Testifies at Senate Banking Committee
* GBP Gross Domestic Product
* USD Durable Goods Orders
* CHF Gross Domestic Product
* EUR German Unemployment Rate
* EUR Euro-Zone Consumer Price Index
* USD Gross Domestic Product Price Index
* CNY Manufacturing PMI
* USD U. of Michigan Confidence
* USD ISM Manufacturing

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

Vice-President of Market Analysis 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