Week in FX Europe – Forget ECB Next Week-Funding Could Be More Expensive

Next week is a shortened trading week for North America. From a data perspective investors will have a lot to digest before ending their sprint at next Friday’s non-farm payroll report. Before investors get to endure any vulnerability’s from the employment announcement, the global investors will have to endure both the copy and rhetoric from a plethora of Central Bankers, and the European Central Bank is one of them.

The ECB’s 23 Governing Council members will meet against a backdrop of improving Euro-zone economic data to discuss their monetary policy. Their own regions gradual recovery remains very much uneven, and continues to be led by Germany. The common theme is that “for the foreseeable future, euro interest rate hikes are excluded.” They are likely to remain at “present or lower levels for an extended period of time.”

Political tension in the Middle East is likely to have more of an impact rather than an ECB announcement and it will probably be felt more by the different euro-zone government issues next week. Austria, Germany, Spain and France will offer a total €18.5b worth of government bonds, and all of these auctions are scheduled ahead of the ECB’s rate setting announcement next Thursday.

Europe not only has to contend with the possibility of the Fed beginning to taper their $85b monthly bond-buying program, but now they have to price in geopolitical risk as well. In times of political and economic uncertainty investors tend to seek safe haven assets and the Bund is one of them. Dealers instead of cheapening the curve to take down cheaper supply, they could end up paying higher bond prices for a safer bond!


* AUD Reserve Bank of Australia Rate Decision
* USD ISM Manufacturing
* AUD Gross Domestic Product
* EUR Euro-Zone Gross Domestic Product
* CAD Bank of Canada Rate Decision
* USD US Federal Reserve Beige Book
* JPY Bank of Japan Monetary Policy Statement
* GBP BOE Asset Purchase Target
* GBP Bank of England Rate Decision
* EUR European Central Bank Rate Decision
* GBP BoE/GfK Inflation
* USD Change in Non-farm Payrolls
* CAD Unemployment Rate

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