Forex

EURUSD momentarily corrects upward

US Federal Reserve speakers have been increasingly engaged in a lively discussion about the near-term path of monetary tightening. Specifically, St. Louis Fed President James Bullard reiterated his call for a 100 bp hike in interest rates by July 1, while noting that the last four inflation reports flag an uptick in inflationary pressures.

15 February 11:32

Geopolitics churn up risk aversion

The global information space was abuzz On Friday afternoon with reports of heightened tension at the Russia-Ukraine border amid a mounting risk of hostilities. Many Western countries have told their citizens to leave Ukraine. Some countries are reducing the number of diplomats in the country, while other countries have transferred their diplomatic missions from Kiev to Lviv.

14 February 11:11

Market’s knee jerk reaction might have been wrong, and second one too

Yesterday’s macro news flow was on the heavy side, and the market’s reaction to it was vibrant and unpredictable. The markets were focused on US inflation, and the reading was closely watched. The headline CPI number bolted up to 7.5% in January, outpacing the 7.3% median consensus and setting a 40-year high. The same index, stripped of highly volatile components (food and energy), grew by 6.0% YoY (vs. 5.9% expected) and 0.6% MoM (vs. 0.5% expected). To complete the picture, it should be noted that the number of initial jobless claims turned out to be lower than expected (223k vs. 230k), while the budget surplus in January, on the contrary, exceeded the median forecast ($119 bln vs. $25 bln projected).

11 February 11:12

EURUSD enters side trend. Lull before the storm?

Volatility in the EURUSD pair has subsided considerably. After the last meetings of the Fed and the ECB, which pushed the key pair up to 1.1484, there has not been much major news for the two major currencies in recent days. Yesterday’s lackluster prints on Germany’s December trade balance (projected surplus of EUR 10.4 bln, vs. the actual reading of EUR 6.8 bln) dampened gains in the European currency, but failed to reverse its trajectory.

10 February 11:40

EURUSD reverts to sluggish correction

Overall, the first half of the week has seen a thin flow of key macro data. The markets are still digesting the latest statements from the Fed and the ECB about winding down economic stimulus. Germany’s trade balance for December came out this morning. The surplus totaled EUR 6.8 bln, missing the median consensus that called for EUR 10.4 bln. This data point exerted additional, albeit moderate, pressure on the key pair.

9 February 11:11

US dollar attempts to rise ahead of March Fed rate hike

The sharp upturn and strengthening of the EURUSD pair during a speech by ECB President Christine Lagarde last week, when the ECB hinted about a recalibration of its monetary policy stance and the possibility of hike interest rates, gave way to a reality check after weak macro data came out of Europe, including a decline in retail sales, as opposed to a robust US labor market report. Friday’s print (over 450k) exceeded the median consensus (150k) by more than 3x, while traders took profits on open long positions in the EURUSD pair, which shot up by 180 pips in just 8 hours.

8 February 13:52

EURUSD consolidates in triangle

The EURUSD pair halted at the key1.1483 resistance level on Friday. This was due to lackluster macro releases out of Europe as opposed to robust data stateside. Notably, Eurozone retail sales in December grew by 2.0% YoY, while experts expected +5.1%. By contrast, US non-farm payrolls surged by 467k in January, while the median consensus called for only 150k.

8 February 11:11

EURUSD hits heavy resistance

The EURUSD pair halted at the key1.1483 resistance level on Friday. This was due to lackluster macro releases out of Europe as opposed to robust data stateside. Notably, Eurozone retail sales in December grew by 2.0% YoY, while experts expected +5.1%. By contrast, US non-farm payrolls surged by 467k in January, while the median consensus called for only 150k.

7 February 12:22

EURUSD tests key resistance

A meeting of the ECB took place yesterday. The European regulator expectedly left interest rates unchanged. On the other hand, it was stated at the press conference that the ECB would slow the increase in assets on its balance sheet, although there was no talk of reducing them yet. However, the market regarded this as monetary policy tightening, so the key pair firmed sharply.

4 February 11:22

EURUSD dips slightly ahead of ECB decision

On Wednesday, the news flow was mostly favorable for the euro, but not for the dollar. Eurozone inflation for January grew at a faster pace than experts expected. The January inflation rate surged by 5.1% YoY in January compared to 4.4% expected. The core CPI rose 2.3% YoY against the median forecast of 1.9%. At the same time, the ADP report showed a 301k decrease in US private payrolls in January compared to the estimate for a 207k gain.

3 February 11:11

EURUSD extends gains

The key currency pair continues to trend higher, drawing support from favorable macroeconomic data. In particular, yesterday Germany’s retail sales for December showed a flat YoY reading, although experts feared a 0.6% decline. Markets have shifted their focus to tomorrow's ECB meeting, at which no rate change is expected, while the tone of the European regulator’s statements will be of great interest.

2 February 11:11

EURUSD gets boost from Germany macro

The European currency drew strong support from macro data out of the largest Eurozone economy – Germany. Released on Monday, the Harmonized Consumer Prices for January showed an increase of 5.1% YoY, while experts had expected only 4.7%. And, as we know, the higher inflation is, the closer the tightening of the ECB's monetary policy, and this would be positive for the euro.

1 February 11:11

EURUSD attempts to push higher despite sluggish news flow

On Friday and the first half of Monday, the single currency was on the back foot in terms of fundamentals. Friday saw the release of Germany’s preliminary Q4 GDP report. Gross domestic profit dropped 0.7% QoQ, although the median consensus had expected only a 0.3% decline. On Monday, the preliminary Eurozone Q4 GDP reading was released. The Eurozone economy expanded by 0.3% QoQ, in line with the median forecast. In addition, YoY growth turned out to be slightly worse than the average forecast, reaching 4.6% vs. 4.7% expected.

31 January 14:07

Dollar surges across the board

The single currency slid 0.83% to 1.1145 on Thursday, January 27. The dollar rally moved forward after the FOMC’s monetary policy meeting that wrapped up on Wednesday. Market particiants’ expectations of Fed tightening triggered an upward spike in UST yields.

28 January 10:58

Winter hawk cry: Powell spooks the market

On January 26, the FOMC kept the federal funds rate steady in the range of 0-0.25%. The post-meeting statement turned out to be quite restrained, given that the regulator intends to reduce asset purchases on the open market by $20 bln (UST) and $10 bln (MBS) starting in February, and wind up QE in early March. “With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate”, the central bank said in a statement at the end of its two-day meeting. The Fed also noted that it will be ready to adjust monetary policy if external risks interfere with the implementation of its goals.

27 January 14:23

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