Dollar sell-off against Euro for the second day despite positive data, ECB acknowledges that price level is going up

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13 January 2017

Written by
Matthew Ryan

Senior Market Analyst at Ebury. Providing expert currency analysis so small and mid-sized businesses can effectively navigate international markets.

Yesterday’s EUR/USD trading was rather calm. Since Trump’s press conference disappointed the markets, the Eurodollar has been trending upwards.

Y
esterday’s minutes from the ECB acknowledging improving inflationary environment combined with positive macroeconomic data from the EU added to the recent optimism from the Eurozone macroeconomic front.

Major currencies in detail

GBP

Sterling edged Thursday’s London session 0.4% lower against the US Dollar.

In the absence of important macroeconomic data the Pound appreciated versus the Dollar in the first half of the day, but after US traders stepped in the trend changed in favour of the American currency. According to sources close to the British PM, Theresa May informed yesterday that she will deliver an important Brexit speech on Tuesday. The information might have unnerved some investors and contributed to the Pound’s poor performance in the second half of the day.

Today’s economic calendar for the UK is mostly empty. Markets will focus on developments elsewhere.

EUR

Euro finished Thursday’s session 0.4% higher against the US Dollar during London trading session.

Yesterday’s “Minutes” relating to the ECB’s last meeting showed that the central bank acknowledged inflationary environment improved worldwide and believes that the European inflation is significantly on the rise. What’s more important, we had a sign of division among the policy members, some of which didn’t fully support the extension of the QE programme by 9 months and 60 billion Euros but would opt for the 6-month extension the markets expected.

Collective Industrial Production data was added to the pile of positive news from the Eurozone we have recently been familiar with and surprised to the upside: November data has shown an expansion of 3.2%, beating the level of 1.6% forecasted. On a yearly basis this impressive expansion is the highest since mid-2011.

Today we await the Spanish Inflation data. Nonetheless it should have very limited effect on markets that will focus on the developments elsewhere.

USD

US Dollar Index finished lower by 0.1% on Thursday.

Yesterday’s labour market data was fairly positive: both jobless claims and continuing jobless claims turned out to be better than expected. Weekly claims rose from 237 thousand in a previous month to 247 thousand, nonetheless, the number was lower than the consensus expected. The series of speeches from FOMC officials was rather mixed but positive. Board’s decision was said to depend on the upcoming data rather than Trump’s policy.

Today in terms of new macroeconomic figures, markets will be focusing on retail sales and PPI inflation index as the most important releases.

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