Forex: Euro Losses To Accelerate On Dovish ECB, Pound To Hold Steady

RELATED QUOTES

SymbolPriceChange
GBPUSD=X1.3193+0.0006
USDJPY=X100.5700+0.032
EURUSD=X1.1288+0.0004

Talking Points

  • Euro: Spain Bond Auction Disappoints, ECB Rate Decision In Focus
  • British Pound: U.K. Cuts Growth Forecast Ahead Of BoE Rate Decision
  • U.S. Dollar: ADP Misses Forecast, Service-Based Activity To Slow

Euro: Spain Bond Auction Disappoints, ECB Rate Decision In Focus

The EURUSD slipped to an overnight low of 1.3060 as manufacturing and service-based activity in Europe contracted for 10 consecutive months, while retail spending slipped another 1.2% in October to mark the second-largest decline for 2012.

At the same time, Spain’s bond auction further dampened the appeal of the single currency as the region sold EUR 4.25B of bonds versus the EUR 4.50B target, and the weakening outlook for the region may produce a short-term reversal in the exchange rate should the European Central Bank (ECB) show a greater willingness to ease monetary policy further.

Although the ECB is widely expected to keep the benchmark interest rate at 0.75% in December, President Mario Draghi may show a greater willingness to cut borrowing costs further as the deepening recession dampens the outlook for price stability. In turn, we will be looking for hints of another rate cut as Mr. Draghi is scheduled to deliver the policy statement tomorrow at 13:30 GMT, and the pullback from 1.3125 may turn into a larger correction as the relative strength index comes off of overbought territory.

As the bullish momentum in the EURUSD gets exhausted, the ECB rate decision could be the fundamental catalyst to trigger a sharp reversal in the exchange rate, and we may see the euro-dollar make another run at the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50 should the ECB carry its easing cycle into the following year.

British Pound: U.K. Cuts Growth Forecast Ahead Of BoE Rate Decision

The British Pound slipped to 1.6085 as Chancellor of the Exchequer George Osborne lowered the growth forecast for theU.K., but we may see the GBPUSD consolidate over the next 24-hours of trading as the Bank of England (BoE) is expected to maintain a wait-and-see approach in 2013.

As the Monetary Policy Committee (MPC) preserves its current policy, we should see the BoE refrain from releasing a policy statement, but the neutral stance may spark a bullish reaction in the British Pound as the central bank slowly moves away from its easing cycle.

Despite the protracted recovery in the U.K., we may see a growing number of BoE officials sound more hawkish in 2013 as inflation stubbornly holds above the 2% target, and we may see the MPC start to discuss a tentative exit strategy in the year ahead amid the growing threat to price stability.

In turn, we may see the GBPUSD coil up for another run at 1.6200 – the 23.6% Fib from the 2009 low to high – and the pair may ultimately threaten the downward trend carried over from 2011 amid the shift in the policy outlook.

U.S. Dollar: ADP Misses Forecast, Service-Based Activity To Slow

The greenback regained its footing on Wednesday, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) advancing to 9,947, but we may see the reserve currency struggle to hold its ground ahead of the Non-Farm Payrolls report as headlines coming out of the world’s largest economy dampens the outlook for growth.

Indeed, the ADP employment report set a weakened outlook for NFPs as private sector employment increased 118K in November amid forecasts for a 125K print, and a slew of dismal developments coming out later today may dampen the appeal of the greenback as market participants maintain still see the Fed expanding its balance sheet further over the coming months.

FX Upcoming

Currency

GMT

EDT

Release

Expected

Prior

USD

15:00

10:00

Factory Orders (OCT)

0.0%

4.8%

USD

15:00

10:00

ISM Non-Manufacutring Composite (NOV)

53.5

54.2

USD

15:30

10:30

DOE U.S. Crude Oil Inventories (NOV 30)

-347K

USD

15:30

10:30

DOE U.S. Distillate Inventory (NOV 30)

-800K

USD

15:30

10:30

DOE U.S. Gasoline Inventories (NOV 30)

3865K

EUR

18:30

13:30

ECB's Joerg Asmussen Speaks on Euro Economy

NZD

20:00

15:00

Reserve Bank of New Zealand Interest Rate Decision

2.50%

2.50%

--- 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...
  • Apple Said to Plan IPhone for Japan With Tap-to-Pay for Subways Bloomberg - 38 minutes ago

    A future iPhone will include technology called FeliCa, a mobile tap-to-pay standard in Japan developed by Sony Corp., according to people familiar with the matter. The FeliCa chip will let customers in Japan store their public bus and train passes … More »

  • Asian Stock Futures Mixed Before Jackson Hole With Oil Above $47 Bloomberg - 45 minutes ago

    Contracts on equity gauges in Japan and South Korea retreated, while those on indexes in Australia and Hong Kong foreshadowed gains following a second day of losses in U.S. shares. Japan’s currency headed for its first weekly drop versus the dollar … More »

  • Air New Zealand flies to record profit
    Air New Zealand flies to record profit AFP News - 1 hour 32 minutes ago

    Air New Zealand announced an operating windfall Friday, posting a record NZ$463 million (US338.01 million) after-tax profit, up 42 percent, as the country benefitted from a tourist boom. It was "the best result ever" in the 76-year history of the … More »

  • European, US equities dip awaiting Fed
    European, US equities dip awaiting Fed AFP News - 1 hour 41 minutes ago

    US and European stocks slid Thursday in choppy trade as investors awaited a key speech by Federal Reserve Chair Janet Yellen that many hope will shed light on the Fed's policy stance. With global economic growth in a slump and the US economy not … More »

  • Dollar General, Dollar Tree report weak sales growth
    Dollar General, Dollar Tree report weak sales growth Associated Press - 1 hour 52 minutes ago

    Discount-store rivals Dollar General and Dollar Tree reported weaker-than-expected sales figures Thursday, as struggling lower-income shoppers spent less at their stores. Shares of both companies fell ... … More »

  • Euro rises as markets tread water before Yellen speech AFP - 2 hours 6 minutes ago

    The euro rose slightly on Thursday against the dollar, the yen and the British pound while investors awaited Friday's keynote address from US Fed chief Janet Yellen. Towards 2100 GMT, the euro was at $1.1281, ... … More »

  • Vegas stadium backers down to 2 top sites for Raiders
    Vegas stadium backers down to 2 top sites for Raiders Associated Press - 2 hours 19 minutes ago

    Backers of a proposed NFL stadium said they've whittled their list to two sites just west of the Las Vegas Strip and refuse to accept any less than $750 million in public funding toward the project, which ... … More »

  • Oil up on U.S.-Iran scare, dollar; Saudi output stance cuts gains
    Oil up on U.S.-Iran scare, dollar; Saudi output stance cuts gains Reuters - 2 hours 29 minutes ago

    Oil prices rose 1 percent on Thursday on U.S.-Iran military tensions in the Gulf and speculation the dollar will fall on a monetary policy speech due from the U.S. Federal Reserve chair. The market, however, gave back some gains after an interview … More »

  • Health care sector pulls stock market lower again
    Health care sector pulls stock market lower again Associated Press - 2 hours 34 minutes ago

    Stocks fell in light trading for a second day on Thursday as investors sifted through a mix of earnings reports. The major indexes wavered between small gains and losses in the morning, then moved lower ... … More »

  • Antrim reports 2Q loss Associated Press - 2 hours 36 minutes ago

    On a per-share basis, the Calgary, Alberta-based company said it had a loss of 1 cent. Earnings, adjusted for asset impairment costs, came to less than 1 cent on a per-share basis. In the final minutes ... … More »

  • Oil up on U.S.-Iran scare, dlr; Saudi output stance cuts gains
    Oil up on U.S.-Iran scare, dlr; Saudi output stance cuts gains Reuters - 2 hours 37 minutes ago

    Oil prices rose 1 percent on Thursday on U.S.-Iran military tensions in the Gulf and speculation the dollar will fall on a monetary policy speech due from the U.S. Federal Reserve chair. The market, however, gave back some gains after an interview … More »

  • How the Dow Jones industrial average fared on Thursday Associated Press - 2 hours 43 minutes ago

    Stocks closed lower on Thursday, led by declines in health-care companies as investors worry about a backlash in Washington against recent price increases for key drugs. A few retailers reported disappointing ... … More »

  • Earliest China Tea Leaves Signal Weakening Business Sentiment Bloomberg - 2 hours 49 minutes ago

    China’s policy makers have refrained from across-the-board monetary stimulus in recent months and switched to reining in risks emerging in the bond and property markets. “Both domestic and export demand remained sluggish, and unfavorable weather … More »

  • China’s Biggest Cities Said to Plan Curbs to Tame Property Boom Bloomberg - 2 hours 49 minutes ago

    Beijing and Tianjin are also contemplating new measures to rein in prices, according to three of the people. China’s top leaders, after a Politburo meeting led by President Xi Jinping last month, pledged to curb asset bubbles amid a renewed focus … More »

  • Hong Kong Regulator Wants a Tighter Grip on IPOs in Blow to HKEx Bloomberg - 2 hours 49 minutes ago

    While the Securities and Futures Commission and Hong Kong Exchanges & Clearing Ltd. have stated publicly that they’re working together on a new regime to approve IPOs, brokers and lawmakers say the proposal would shift power toward the regulator. … More »

  • Zayo Group reports 4Q loss Associated Press - 2 hours 52 minutes ago

    On a per-share basis, the Boulder, Colorado-based company said it had a loss of 13 cents. Earnings, adjusted to extinguish debt, were 1 cent per share. The results met Wall Street expectations. The average ... … More »

  • Exclusive - Exchange Bats eyes new EU base outside London after Brexit
    Exclusive - Exchange Bats eyes new EU base outside London after Brexit Reuters - 2 hours 53 minutes ago

    Europe's biggest stock exchange Bats Europe could open a base outside London following Brexit, its head told Reuters, voicing doubts about whether the City of London would secure sufficient access to the European market. Bats Europe accounts for … More »

  • Kerry arrives in Geneva for Syria talks with Lavrov
    Kerry arrives in Geneva for Syria talks with Lavrov AFP News - 2 hours 54 minutes ago

    US Secretary of State John Kerry arrived in Geneva late Thursday for a meeting with his Russian counterpart Sergei Lavrov to discuss the situation in war-ravaged Syria. Earlier Thursday, the UN special envoy for Syria Staffan de Mistura described … More »

  • US stocks edge lower ahead of Yellen speech AFP - 3 hours ago

    US stocks finished lower on Thursday ahead of a much-awaited speech by Federal Reserve Chair Janet Yellen that analysts hope will clarify the Fed's policy stance. Health care and pharmaceutical shares ... … More »

  • Hedge Funds Suddenly Winning on China’s Most Dangerous Short (1) Bloomberg - 3 hours ago

    After suffering through a 953 percent rally in shares of Yirendai Ltd. since mid-February, hedge funds and other bearish speculators were rewarded over the past four days as the Chinese peer-to-peer lender sank 35 percent in U.S. trading. Holding … More »

  • Net 1 UEPS posts 4Q profit Associated Press - 3 hours ago

    The Johannesburg-based company said it had profit of 48 cents per share. Earnings, adjusted for one-time gains and costs, came to 51 cents per share. The payments company posted revenue of $151.3 million ... … More »

  • Vivendi keeps negotiating with Mediaset despite public spat - sources
    Vivendi keeps negotiating with Mediaset despite public spat - sources Reuters - 3 hours ago

    PARIS/MILAN (Reuters) - French media giant Vivendi (VIV.PA) and Italian broadcaster Mediaset (MS.MI) are negotiating behind closed doors to forge an alternative partnership despite an ongoing war of words over a disputed pay-tv deal, three sources … More »

  • QAD Inc. posts 2Q profit Associated Press - 3 hours ago

    On a per-share basis, the Santa Barbara, California-based company said it had net income of 3 cents. Earnings, adjusted for stock option expense and amortization costs, were 15 cents per share. The manufacturing ... … More »

  • QAD posts 2Q profit Associated Press - 3 hours ago

    On a per-share basis, the Santa Barbara, California-based company said it had profit of 3 cents. Earnings, adjusted for stock option expense and amortization costs, were 15 cents per share. The enterprise ... … More »

  • Wall St. slips on healthcare, consumer names; Fed eyed
    Wall St. slips on healthcare, consumer names; Fed eyed Reuters - 3 hours ago

    U.S. stocks were modestly lower on Thursday, weighed down by a drop in healthcare and consumer names, while financials advanced slightly after two more Federal Reserve officials pushed the case for a rate hike. Healthcare stocks, down 0.8 percent, … 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
    0.128-0.001-0.78%
    N21.SI
    0.355-0.010-2.74%
    E5H.SI
    0.59-0.01-1.67%
    5TP.SI
    1.00+0.01+1.01%
    Y92.SI
    0.785-0.010-1.26%
    BS6.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.45+0.09+26.76%
    AYB.SI
    0.465+0.080+20.78%
    E8Z.SI
    0.16+0.02+14.29%
    UV1.SI
    0.20+0.02+11.11%
    BGO.SI
    0.188+0.018+10.59%
    AWS.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.35-0.10-22.22%
    BFK.SI
    0.185-0.040-17.78%
    Y35.SI
    0.40-0.06-13.04%
    BBW.SI
    0.20-0.03-13.04%
    AWI.SI
    0.194-0.026-11.82%
    BLZ.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3524-0.0007-0.05%
    USDSGD=X
    1.5263-0.0004-0.03%
    EURSGD=X
    1.78430.000.00%
    GBPSGD=X
    74.3300+0.085+0.11%
    SGDJPY=X
    5.7327+0.0045+0.08%
    SGDHKD=X
    2.9648+0.0008+0.03%
    SGDMYR=X
    9,821.0518+2.4668+0.03%
    SGDIDR=X
    4.9188-0.0015-0.03%
    SGDCNY=X
    1.0311+0.0005+0.05%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,324.00-0.60-0.05%
    GCZ16.CMX
    18.490.00-0.02%
    SIU16.CMX
    96.51+1.17+1.23%
    ^XAU
    2.080.000.00%
    HGU16.CMX
    47.330.000.00%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.16+0.01
    ^FVX
    1.58+0.02
    ^TNX
    2.26+0.02
    ^TYX