Euro Dived on ECB Wake Up Call

Euro Dived on ECB Wake Up Call

Euro Dived on ECB Wake Up Call

Euro was sold off broadly last week as the markets got a wake up call regarding expectation on EC B policy path. The common currency topped the top mover chart with EUR/G BP losing -1.96% and EUR/C AD lost -1.81%. Weakness in Euro also dragged down the Swiss Franc as G BP/C HF rose 1.77% while CAD/C HF rose 1.58%. On the other hand, Sterling ended as the strongest major currency last week, after some volatility on UK's trigger of Brexit finally. Yen followed as the second strongest major currency as the recovery in US stocks and yields were disappointing.  Meanwhile, Canadian dollar ended as the third major currency as WTI crude oil rebounded and closed above 50 psychological level. 

 

Two more hikes as Fed's base case

A number of Fed officials spoke last week and generally speaking, the base case of Fed is still three hikes in total this year. And that hasn't taken into account fiscal policies due to uncertainties around. Stocks and yields were pairing back prior gains based on the expectation of US President Donald Trump's expansive policies. The failure of the health care act raised much doubt on Trump's ability to push through his agendas.

For now, Dollar trader will look into economic data to solidify the base case of two more Fed hikes this year. Key data will be released this week including ISM indices and non- farm payroll. Wage growth will stay as a focus for the markets.

 

EUR/US D edged higher to 1.0905 last week but was rejected by 55 week EMA and reversed. The development argues that corrective rise from 1.0339 is completed and larger down trend is ready to resume. Firm break of 1.0494 support will affirm this bearish case.

 

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***Information contained in this news letter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision

making, but merely provides information from the market for its clients as additional information being made available as per the events occurring in the financial markets.

 

 

 

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