Forex Investment and Currency Trading

ECB clearly ups the hawkish ante…
While delivered with a French accent, this week’s press statement had a decidedly Germanic tone with its clear hawkish leanings redolent of ECB Council uber hawks Weber and Liebscher. The opening paragraph contained a clear threat of higher rates via the insertion of notes that “…inflation is now expected to remain high for a more protracted period than previously thought”, the Bank is “in a state of heightened alertness” and that it will prevent the emergence of second round effects by “acting in a firm and timely manner”. More
tellingly, meanwhile, was the removal of the [...]

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On all reasonable measures, the euro has been an outstanding success. Upon its 10-year anniversary, the ECB can celebrate a remarkable record. While the ECB has kept home-grown inflation tightly under control, the region has enjoyed a major rise in employment amid a series of structural reforms. New challenges are ahead. But the record suggests that the Eurozone can cope with these new challenges as well.
As the European Central Bank celebrates its 10-year anniversary on June 1, the bankers as well as the politicians who founded the ECB can look back at a remarkable decade. By any reasonable measure, the [...]

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Eurozone The advance PMI for April showed a slight gain for the composite index, which edged up to 51.9 from 51.8 in March. This resulted from opposing trends in services and manufacturing, as services rose to 51.8 from 51.6 in the previous month, while manufacturing fell to 50.8 from 52.0 in March. Germany’s readings remained stronger than the Euro area’s, but showed a similar tendency between the two macro sectors, with services rising to 54.6 from 51.8 and manufacturing falling to 53.6 from 55.1. Given that manufacturing is more exposed to international competition, one can read the drop in the [...]

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1 – 3 Month Outlook – retest highs
EUR/USD spiked to a new all time high of 1.5904 in mid-March. Unusually, by recent standards, much of the move represented independent EUR direction, rather than EUR gaining by default as USD sold off across the board. In markets that were generally dominated by rising risk aversion, usually a fairly neutral EUR environment, EUR matched the gains seen by CHF and JPY. EUR’s gains largely reflect diminishing expectations for ECB rate cuts. At the trough of rate expectations in mid-February, EURIBOR futures fully discounted three 25bp ECB rate cuts. Currently, futures discount one [...]

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