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

RELATED QUOTES

SymbolPriceChange
GBPUSD=X1.3006-0.0016
USDJPY=X100.5380+0.127
EURUSD=X1.1213-0.0005

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...
  • Tribune Media completes sale of Tribune Tower, other assets
    Tribune Media completes sale of Tribune Tower, other assets Associated Press - 5 minutes ago

    Tribune Media has completed the sale of several real estate assets, including the Tribune Tower in Chicago. The Chicago-based company announced last month that it was selling the 1925 neo-Gothic tower ... … More »

  • Swiss Exchange confident of post-Brexit access to EU stock market
    Swiss Exchange confident of post-Brexit access to EU stock market Reuters - 7 minutes ago

    The SIX Swiss Exchange said on Wednesday it was confident it can continue serving investors in the European Union without having to set up a new exchange after Britain exits the EU. Switzerland is not part of the EU and currently serves customers … More »

  • Tokyo to propose moving more venues for Olympics
    Tokyo to propose moving more venues for Olympics Associated Press - 13 minutes ago

    Tokyo's original plans for a compact Olympics in 2020 continue to fall by the wayside. A Tokyo government panel is set to propose moving more venues outside of the city — including hundreds of kilometers ... … More »

  • SABMiller investors cheer $100 billion-plus AB InBev takeover
    SABMiller investors cheer $100 billion-plus AB InBev takeover Reuters - 19 minutes ago

    LONDON/BRUSSELS (Reuters) - SABMiller (SAB.L) shareholders overwhelmingly backed the brewer's $100 billion-plus takeover by Anheuser-Busch InBev (ABI.BR) on Wednesday, clearing the last big hurdle for one of the largest corporate mergers in history. … More »

  • The Latest: Obama says people don't give Clinton credit
    The Latest: Obama says people don't give Clinton credit Associated Press - 22 minutes ago

    The Latest on the U.S. presidential election (all times EDT): 9:20 a.m. President Barack Obama says people don't give Hillary Clinton enough credit — perhaps partially because she's a woman. Obama was ... … More »

  • Lufthansa board approves takeover of Brussels Airlines
    Lufthansa board approves takeover of Brussels Airlines Reuters - 34 minutes ago

    Lufthansa (LHAG.DE) said its supervisory board has approved plans to acquire the remaining 55-percent stake in Brussels Airlines via the exercise of a call option as part of its plan to boost its low-cost unit Eurowings via acquisitions. The … More »

  • ING selling $300 million Kotak Mahindra stake - term sheet
    ING selling $300 million Kotak Mahindra stake - term sheet Reuters - 35 minutes ago

    Dutch financial services company ING Group is selling a $300 million stake in Indian lender Kotak Mahindra Bank Ltd in a block trade on Thursday, according to a deal term sheet seen by Reuters. The deal has an upsize option of up to $550 million, … More »

  • Credit Suisse CEO says bank relatively well positioned for Brexit
    Credit Suisse CEO says bank relatively well positioned for Brexit Reuters - 37 minutes ago

    Credit Suisse (CSGN.S) Chief Executive Tidjane Thiam said on Wednesday that his bank was relatively well placed to deal with the impact of Britain's vote to leave the European Union. Credit Suisse's EU investment banking business is run out of … More »

  • Oil climbs on hopes of output-limiting deal in November
    Oil climbs on hopes of output-limiting deal in November Reuters - 44 minutes ago

    Oil prices rose on Wednesday, after sharp losses in the previous session, as the focus shifts to a potential output-curbing deal from OPEC later this year and a surprise drawdown in U.S. crude stocks. Brent crude (LCOc1) was up 59 cents to $46.56 a … More »

  • Tie-up of world's biggest beer makers clears final hurdle Associated Press - 48 minutes ago

    A deal worth over $100 billion to combine the world's two biggest beer companies cleared its last major hurdle Wednesday when the shareholders of SABMiller approved the takeover by Budweiser maker Anheuser-Busch ... … More »

  • Pakistan launches $500 million in Islamic bonds AFP - 51 minutes ago

    Pakistan is set to launch $500 million in Islamic bonds to raise money for its foreign exchange reserves, a senior official said Wednesday, as a three-year IMF bailout package nears a close. The government ... … More »

  • Deutsche Bank relief helps European markets regain footing
    Deutsche Bank relief helps European markets regain footing Associated Press - 51 minutes ago

    European stock markets brushed aside a mixed performance in Asia earlier Wednesday to post solid gains amid some relief over the financial future of Germany's largest bank, Deutsche Bank. KEEPING SCORE: ... … More »

  • BlackBerry outsourcing smartphone design in strategic shift; shares up
    BlackBerry outsourcing smartphone design in strategic shift; shares up Reuters - 57 minutes ago

    BlackBerry Ltd will outsource the development and design of its flagship smartphone, an industry it helped pioneer, as it bets its future on software and services, the Canadian technology company said on Wednesday. The new helped send BlackBerry … More »

  • Germany denies preparing Deutsche Bank rescue plan Reuters - 1 hour 16 minutes ago

    The German government denied it was working on a rescue of Deutsche Bank as Germany's biggest lender boosted its balance sheet by selling its British insurance business on Wednesday. Deutsche is facing a $14 billion fine from the U.S. Department of … More »

  • Owner of Malaysia's Proton shortlists 5 bids for equity sale Associated Press - 1 hour 22 minutes ago

    The owner of Malaysian national carmaker Proton says it has shortlisted five foreign partners for a partnership that includes an equity sale aimed at reviving the loss-making company. Syed Faisal Albar ... … More »

  • Saudis soften oil stance on Iran but OPEC deal still elusive Reuters - 1 hour 22 minutes ago

    OPEC might still agree an oil output-limiting deal later this year as the economic problems of its de-facto leader Saudi Arabia force Riyadh to cede more ground to arch-rival Iran. Saudi Energy Minister Khalid al-Falih said on Tuesday Iran, Nigeria … More »

  • Actuant tops 4Q profit forecasts Associated Press - 1 hour 22 minutes ago

    The Menomonee Falls, Wisconsin-based company said it had profit of 29 cents per share. Earnings, adjusted for one-time gains and costs, came to 30 cents per share. The results beat Wall Street expectations. ... … More »

  • Deutsche helps lift European stocks before Yellen, Draghi
    Deutsche helps lift European stocks before Yellen, Draghi Reuters - 1 hour 33 minutes ago

    By Nigel Stephenson LONDON (Reuters) - A recovery in Deutsche Bank shares helped push European stocks higher on Wednesday, easing concerns over Germany's financial sector that had hit equities in Asia ... … More »

  • Dissident SABMiller shareholder Aberdeen disappointed with vote Reuters - 1 hour 41 minutes ago

    LONDON (Reuters) - Aberdeen Asset Management (ADN.L), an SABMiller (SAB.L) shareholder that opposed the brewer's takeover by Anheuser Busch InBev (ABI.BR), said it was "obviously disappointed by not ... … More »

  • BlackBerry is giving up on making its own phones
    BlackBerry is giving up on making its own phones Business Insider - 1 hour 54 minutes ago

    Reuters John Chen, CEO of BlackBerry. It’s the … Continued The post BlackBerry is giving up on making its own phones appeared first on Business Insider. … More »

  • Deutsche gets lift from $1.2 billion sale of Abbey Life to UK's Phoenix Reuters - 1 hour 55 minutes ago

    Deutsche Bank AG (DBKGn.DE) has sold its British insurance business Abbey Life to Phoenix Group Holdings (PHNX.L) as it sheds non-core assets and reduces its balance sheet in an effort to reassure anxious investors and meet regulators' demands. … More »

  • Russian charged for flying drone over Polish PM's office AFP - 1 hour 56 minutes ago

    Polish prosecutors said on Wednesday they had charged a Russian citizen with violating airspace laws for allegedly flying an unauthorised drone over the prime minister's office in Warsaw. Identified only ... … More »

  • Any ECB scheme to buy stocks could total 200 billion euros - ABN AMRO Reuters - 1 hour 58 minutes ago

    The ECB is widely expected to extend its 1.7 trillion euro (£1.47 trillion) asset purchase programme given still low inflation and tepid economic growth, both of which the programme is designed to combat. In a note, ABN AMRO said the structure used … More »

  • Moldova bans Ukraine meat over African swine fever fears Associated Press - 2 hours 3 minutes ago

    Moldovan authorities are banning the import of live animals and meat from Ukraine due to fears of African swine fever. Agriculture Minister Eduard Grama says the ban begins Wednesday after several suspected ... … More »

  • European stocks rebound awaiting OPEC decision
    European stocks rebound awaiting OPEC decision AFP News - 2 hours 4 minutes ago

    European stock markets rebounded on Wednesday, brushing aside a broad retreat across Asia, as investors paid close attention to a meeting of OPEC to tackle a global supply glut. Around 1030 GMT, London's benchmark FTSE 100 index was up 0.7 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
    0.151+0.010+7.09%
    N21.SI
    0.975+0.010+1.04%
    Y92.SI
    0.144+0.002+1.41%
    5DM.SI
    4.00+0.01+0.25%
    Z74.SI
    0.675+0.050+8.00%
    BMT.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.37+0.12+45.10%
    AZT.SI
    0.24+0.05+26.32%
    AWI.SI
    0.15+0.02+15.38%
    RF7.SI
    0.215+0.026+13.76%
    I07.SI
    0.13+0.01+8.33%
    5UE.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.112-0.028-20.00%
    BEH.SI
    0.66-0.05-7.04%
    BTE.SI
    0.32-0.02-5.88%
    P9D.SI
    0.225-0.010-4.26%
    PA3.SI
    0.23-0.01-4.17%
    K14.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3599+0.0004+0.03%
    USDSGD=X
    1.52490.000.00%
    EURSGD=X
    1.7687-0.0015-0.08%
    GBPSGD=X
    73.9100+0.054+0.07%
    SGDJPY=X
    5.6995-0.0028-0.05%
    SGDHKD=X
    3.0418+0.0028+0.09%
    SGDMYR=X
    9,519.8809-8.5723-0.09%
    SGDIDR=X
    4.9050-0.0005-0.01%
    SGDCNY=X
    1.0427+0.0005+0.05%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,326.70-3.70-0.28%
    GCZ16.CMX
    19.12-0.04-0.21%
    SIZ16.CMX
    93.54+0.56+0.60%
    ^XAU
    2.19+0.02+0.76%
    HGZ16.CMX
    43.85+0.41+0.94%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.12-0.01
    ^FVX
    1.56-0.03
    ^TNX
    2.29-0.04
    ^TYX