Forex Analysis: Euro Weighed By Growth Concerns- All Eyes On ECB

RELATED QUOTES

SymbolPriceChange
GBPUSD=X1.2942-0.0021
USDJPY=X100.4710-0.579
EURUSD=X1.1246+0.002

Talking Points

  • Euro: EU Cuts Growth Forecast, ECB Sees ‘Very Low’ Inflation Risk
  • British Pound: To Consolidate Ahead Of BoE, 1.6200 In Sight
  • U.S. Dollar: Benefits From Risk Aversion, Consumer Credit On Tap

Euro: EU Cuts Growth Forecast, ECB Sees ‘Very Low’ Inflation Risk

The EURUSD tumbled to a fresh monthly low of 1.2735 as the EU warned of a deepening recession in the euro-area, and the pair may continue to give back the rebound from earlier this year as the fundamental outlook for the region turns increasingly bleak.

Indeed, the EU lowered its 2013 forecast as the group now sees the region growing 0.1% versus an initial forecast for a 1.0% rise, while Greece’s debt-to-GDP ratio is anticipated to exceed prior expectations as the debt crisis continues to drag on the real economy. In response, European Central Bank (ECB) President Mario Draghi warned that ‘the latest data suggest that these developments are now starting to affect the German economy,’ and struck a very dovish tone for monetary policy as the risk for inflation remains ‘very low over the medium term.’

Although the ECB is widely expected to maintain its current policy is October, we may see a growing number of central bank officials call for additional measures to shore up the ailing economy, and the Governing Council may now look to target the benchmark interest rate in an effort to combat the economic downturn in Europe.

As the double-top formation on the EURUSD continues to pan out, we may see the pair come up against the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50 to test for interim support, but the euro-dollar may ultimately give back the rebound from 1.2041 as the ECB continues to embark on its easing cycle.

British Pound: To Consolidate Ahead Of BoE, 1.6200 In Sight

The British Pound continued to trade within the range-bound price action carried over from the previous month even as the EU lowered its fundamental assessment for the U.K., but the recent weakness in the sterling maybe short-lived as the Bank of England (BoE) appears to be softening its dovish outlook for monetary policy.

Indeed, forex traders may show a fairly muted reaction to the BoE rate decision should the group refrain from releasing a policy statement, but the meeting minutes may reveal a growing rift within the Monetary Policy Committee (MPC) as an increasing number of central bank officials see a diminishing risk of undershooting the 2% target for inflation.

As the U.K. emerges from the double-dip recession, we should see the BoE carry its wait-and-see approach into the following year, and the shift in the policy outlook should open the door for another test of the 1.6200 figure, the 23.6% Fib from the 2009 low to high.

U.S. Dollar: Benefits From Risk Aversion, Consumer Credit On Tap

The greenback appears to be regaining its footing on Wednesday, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) snapping back from an overnight low of 9,923, and the reserve currency may continue to track higher throughout the North American trade as it benefits from safe-haven flows.

As headlines coming out of Europe drags on risk-taking behavior, the drop in market sentiment should prop up the dollar over the remainder of the week, but we may see the reserve currency consolidate ahead of the ECB and BoE interest rate decisions as market participants weigh the outlook for monetary policy.

Nevertheless, as the economic docket is expected to show another $10.125B expansion in consumer credit, the ongoing improvement in private sector activity should dampen the Fed’s scope to ease policy further, and the bullish sentiment surrounding the U.S. dollar may gather pace over the near-term as the world’s largest economy gets on a more sustainable path.

FX Upcoming

Currency

GMT

EDT

Release

Expected

Prior

USD

20:00

15:00

Consumer Credit

$10.125B

$18.123B

NZD

21:45

16:45

Unemployment Rate

6.7%

6.8%

NZD

21:45

16:45

Employment Change (QoQ)

0.3%

-0.1%

NZD

21:45

16:45

Employment Change (YoY)

0.8%

0.6%

NZD

21:45

16:45

Participation Rate (QoQ)

68.4%

68.4%

NZD

23:00

18:00

QV House Prices (YoY)

5.3%

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

Will the EUR/USD Resume the Downward Trend From 2011? Join us in the Forum

Related Articles: Weekly Currency Trading Forecast

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Singapore scion buys 49 percent stake in Rolling Stone AFP News - 16 minutes ago

    A Singapore firm headed by a scion of one of Asia's richest families has bought a 49 percent stake in Rolling Stone, with plans to diversify the iconic magazine into new business including live events and merchandising. BandLab Technologies, a … More »

  • German business confidence soars as Brexit fears 'disappear'
    German business confidence soars as Brexit fears 'disappear' AFP News - 17 minutes ago

    German business confidence soared to its highest level in more than two years in September, the Ifo economic institute said Monday, recovering from a post-Brexit slump and signalling a rosier outlook for Europe's largest economy. "The German … More »

  • UK mortgage approvals hit 19-month low, more weakness seen
    UK mortgage approvals hit 19-month low, more weakness seen Reuters - 19 minutes ago

    Britain's housing market showed signs of slowing in August with the number of mortgages approved by banks falling to its lowest level since January 2015 and analysts said they expected further weakness ahead as Brexit uncertainty dampens demand next … More »

  • BOJ's Kuroda sees no big rise or fall in bond buying for now
    BOJ's Kuroda sees no big rise or fall in bond buying for now Reuters - 20 minutes ago

    The pace at which the Bank of Japan buys bonds will depend on what is needed to achieve its yield curve target but no big increases or decreases were expected for now, Governor Haruhiko Kuroda said on Monday, dampening speculation that the BOJ was … More »

  • AP Top Extended Financial Headlines at 5:56 a.m. EDT Associated Press - 32 minutes ago

    Global shares are mostly lower as market attention turns from central bank policies to the U.S. presidential race ahead of a highly anticipated debate … More »

  • PBOC Drains Most Funds in Six Months Amid Debt Curb Speculation Bloomberg - 35 minutes ago

    The monetary authority has signaled that it wants to limit runaway borrowing, with Deputy Governor Yi Gang cited as saying that the goal is to bring down leverage ratio growth. The central bank has in the past month restarted the use of both 14- … More »

  • Contagion Risks Rise as China Banks Fund Each Others’ Loans (3) Bloomberg - 37 minutes ago

    Wholesale funds, including those raised in the interbank market, accounted for a record 34 percent of small- and medium-sized bank financing as of June 30, compared with 29 percent on Jan. 31 last year, Moody’s Investors Service estimated in an Aug. … More »

  • Gold slips on firm dollar; market focuses on U.S. debate outcome
    Gold slips on firm dollar; market focuses on U.S. debate outcome Reuters - 42 minutes ago

    Gold prices edged lower on Monday as the dollar firmed, though the market is focused on the outcome of the U.S. presidential debate later in the day, that could see investors buying more of the metal as a hedge against financial uncertainty. Spot … More »

  • S.Korea prosecutors seek arrest warrant for Lotte Group chairman Reuters - 43 minutes ago

    South Korean prosecutors asked a court on Monday to approve an arrest warrant for the chairman of the Lotte Group conglomerate on suspicion of embezzlement and breach of trust, a prosecution source with direct knowledge of the matter said. The … More »

  • Carige eyeing state guarantee in 900 million euro bad loan sale - sources Reuters - 48 minutes ago

    Banca Carige is considering using a state guarantee to sell 900 million euros ($1 billion) in bad loans, two sources close to the matter said on Monday, as Italian banks seek to tackle a major source of weakness for their balance sheets. The … More »

  • Top tech investor Marc Andreessen has quit Twitter (again)
    Top tech investor Marc Andreessen has quit Twitter (again) Business Insider - 50 minutes ago

    Michael Kovac/Getty Images for Vanity Fair Marc Andreessen. … Continued The post Top tech investor Marc Andreessen has quit Twitter (again) appeared first on Business Insider. … More »

  • Markets drop as Fed rally vanishes
    Markets drop as Fed rally vanishes AFP News - 58 minutes ago

    World markets dropped on Monday, picking up where they left off after last week's Fed-inspired rally ran out of steam. The stay of execution for easy money served to bolster the Japanese yen, knocking the stuffing out of Tokyo which ended down 1.25 … More »

  • TABLE-TOCOM Sept rubber deliveries at 279 lots Reuters - 1 hour 2 minutes ago

    TOKYO, Sept 26 (Reuters) - Following are deliveries and expiry prices of contracts that have expired on the Tokyo Commodity Exchange in the past six months. Each lot is for 5 tonnes. Contract Sept Aug ... … More »

  • How Russia's central bank chief held the line Reuters - 1 hour 5 minutes ago

    One Thursday evening in March, Elvira Nabiullina, governor of Russia's central bank, faced down a rival in the struggle for influence inside President Vladimir Putin’s entourage. At a meeting chaired by Putin, Economy Minister Alexei Ulyukayev … More »

  • Oil steady as market awaits Algiers meeting; funds cut bullish bets
    Oil steady as market awaits Algiers meeting; funds cut bullish bets Reuters - 1 hour 8 minutes ago

    Oil held steady on Monday, as the world's largest producers gathered in Algeria to discuss ways to support the market, although scepticism about any deal being reached has prompted money managers to cut their bullish bets to a one-month low. Price … More »

  • China Stocks Decline Most in Two Weeks as Volatility Resurfaces Bloomberg - 1 hour 17 minutes ago

    Hong Kong’s Hang Seng Index retreated 1.6 percent, paring Asia’s best quarterly performance. The sudden drop came after turnover on China’s equity exchanges fell to the lowest level in two years as a booming housing market and an equity rally … More »

  • Alibaba keen to promote Sabah's tourist attractions in China Business Times - 1 hour 17 minutes ago

    HANGZHOU: Global online marketing giant Alibaba Group has expressed readiness to help promote Sabah's tourism attractions through its online travel marketing platform, Alitrip. Its General Manager for Destination Division, Tony Duan, said Alibaba … More »

  • Brexit shock has been digested for now, Ifo economist says
    Brexit shock has been digested for now, Ifo economist says Reuters - 1 hour 26 minutes ago

    MUNICH (Reuters) - The shock over Britain's decision to quit the European Union has been overcome for now, Ifo economist Klaus Wohlrabe told Reuters on Monday after the institute's monthly survey showed ... … More »

  • China flies military planes over strait near Japan
    China flies military planes over strait near Japan AFP News - 1 hour 30 minutes ago

    China has sent fighter planes for the first time over a strait near Japan, the two governments said Monday, after Tokyo announced it may patrol alongside the US in the disputed South China Sea. More than 40 Chinese military aircraft on Sunday … More »

  • South Korea prosecutors seek arrest warrant for Lotte Group chairman
    South Korea prosecutors seek arrest warrant for Lotte Group chairman Reuters - 1 hour 35 minutes ago

    South Korean prosecutors asked a court on Monday to approve an arrest warrant for the chairman of the Lotte Group conglomerate on suspicion of embezzlement and breach of trust, a prosecution source with direct knowledge of the matter said. The … More »

  • Germany's Lanxess to buy U.S chemical firm Chemtura for $2.7 billion
    Germany's Lanxess to buy U.S chemical firm Chemtura for $2.7 billion Reuters - 1 hour 38 minutes ago

    Lanxess AG is to buy U.S. speciality chemical company Chemtura for 2.4 billion euros (2 billion pounds) including debt in the German company's largest ever takeover, moving it further away from its main synthetic rubber business. Lanxess's offer … More »

  • Robert Kuok's grandnephew buys 49pct stake in Rolling Stone Business Times - 1 hour 43 minutes ago

    SINGAPORE: A Singapore firm headed by a scion of one of Asia’s richest families has bought a 49 percent stake in Rolling Stone, with plans to diversify the iconic magazine into new business including live events and merchandising. BandLab … More »

  • Lessons to learn from property investors
    Lessons to learn from property investors ZUU online - 1 hour 46 minutes ago

    Lessons to learn from property investors What does it mean to be truly wealthy? Or at least to... … More »

  • Don't expect pace of JGB buying to fluctuate sharply - BOJ Kuroda Reuters - 1 hour 51 minutes ago

    OSAKA, Japan (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Monday he does not expect the pace of the central bank's government bond buying to increase or decrease sharply for the time being. ... … More »

  • Robert Kuok's nephew buys 49pct stake in Rolling Stone Business Times - 1 hour 51 minutes ago

    SINGAPORE: A Singapore firm headed by a scion of one of Asia’s richest families has bought a 49 percent stake in Rolling Stone, with plans to diversify the iconic magazine into new business including live events and merchandising. BandLab … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.138+0.002+1.47%
    N21.SI
    0.74+0.02+2.78%
    BS6.SI
    0.141-0.002-1.40%
    5DM.SI
    0.265-0.005-1.85%
    5ME.SI
    0.355-0.005-1.39%
    E5H.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.225+0.025+12.50%
    BTF.SI
    0.475+0.050+11.76%
    AWC.SI
    0.147+0.011+8.09%
    5NF.SI
    0.60+0.04+7.14%
    BDR.SI
    0.195+0.013+7.14%
    43B.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.345-0.060-14.81%
    BLR.SI
    1.16-0.20-14.71%
    P01.SI
    0.164-0.026-13.68%
    AWI.SI
    0.22-0.03-12.00%
    BJD.SI
    0.425-0.055-11.46%
    BLL.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3604+0.0023+0.17%
    USDSGD=X
    1.5301+0.0065+0.43%
    EURSGD=X
    1.7606+0.0034+0.19%
    GBPSGD=X
    73.8340-0.288-0.39%
    SGDJPY=X
    5.6978-0.0077-0.13%
    SGDHKD=X
    3.0403+0.0135+0.45%
    SGDMYR=X
    9,595.6553-59.8779-0.62%
    SGDIDR=X
    4.9009-0.0057-0.12%
    SGDCNY=X
    1.0374+0.0024+0.23%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,340.60-1.10-0.08%
    GCZ16.CMX
    19.52-0.29-1.46%
    SIZ16.CMX
    95.76-3.02-3.05%
    ^XAU
    2.19-0.01-0.59%
    HGZ16.CMX
    43.85+0.41+0.94%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.15-0.02
    ^FVX
    1.62-0.02
    ^TNX
    2.34-0.01
    ^TYX