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    European Session – Euro declines to new seven-month low ahead of ECB

    The euro remained under pressure as the main focus for the market is the ECB meeting on Thursday that is expected to unveil fresh monetary easing measures. The single currency is headed for its biggest monthly decline since March against the dollar and reached a new low since April today at 1.0562.

    Data out from Europe showed German retail sales numbers were weaker-than-expected, falling 0.4% m/m in October while German flash CPI data were in line with expectations of a 0.1% gain in November.

    Sterling fell to a seven-month low of 1.4992 against the dollar, easing below the key 1.5000 level for the first time since April. UK lending data today were broadly in line with expectations. The pound has come under pressure lately as markets realize that the Bank of England is in no rush to raise interest rates. UK manufacturing and construction data reports due later this week are expected to reflect slower output and may weigh further on the pound.

    The Swedish crown gained after data showed Sweden’s economy expanded by twice the rate expected by economists. GDP grew by 0.8% q/q in the third quarter of the year. Estimates were for the economy to expand by 0.4% q/q. The better-than-expected figures make it more difficult for the Riksbank, Sweden’s central bank, to justify looser monetary policy. The euro fell to 9.1946 versus the crown, the lowest since June 18.

    The dollar/yen pair crossed back above the key 123.00 yen level for the first time in a week to reach 123.13. US pending home sales rose less than forecast in October after declining in the prior two months. October sales increased 0.2% after a revised 1.6% decline in September. Economists projected a 1% increase. A key risk for this pair will be Friday’s US nonfarm payrolls report and also a speech and testimony by Fed Chair Janet Yellen on Wednesday and Thursday.

    The Reserve Bank of Australia policy meeting is due tomorrow and the central bank is widely expected to keep interest rates on hold. Weak capital expenditure data released in Australia last week alongside the continued slide in iron ore prices suggest downside risks remain for the economy. Therefore, comments by RBA Governor Stevens will be important to watch for any hints the bank will leave the door open for further easing, if needed. The aussie rose to 0.7231 against the greenback today.

    China’s PMI data tomorrow are also an important risk event.

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