CAC Jumps on Strong Corporate Earnings

The CAC index has posted strong gains in the Thursday session. Currently, the index is at 5,241.75 up 1.47% since the close on Wednesday. On the release front, the eurozone trade surplus widened in December, climbing to EUR 23.8 billion. This beat the forecast of EUR 22.4 billion.

US markets were higher on Wednesday, and European stock markets have followed suit in Thursday trade. US investors shrugged off soft retail sales as well as higher inflation. The recent sell-off was triggered by concern that stronger inflation would lead to an acceleration in rate hikes. So far, the stronger CPI numbers out of the US have not spooked investors, but if US data continues to beat expectations, the market sell-off could resume. In Europe, strong corporate earnings reports have boosted the markets on Thursday. The bank sector is looking sharp, and CAC banking shares are higher – BNP Paribas has jumped 1.92%, and Credit Agricole is up 1.55%.

ECB President Mario Draghi said last week that he is more confident that eurozone inflation is moving closer to the ECB target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro’s exchange rates. Draghi’s concerns about the exchange rate have been underscored by last week’s stock market turbulence, which boosted the dollar and sent the euro lower by 1.6 percent. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are looking for hints as to whether the ECB will normalize policy and wind up stimulus in September.

Economic Calendar

Thursday (February 15)

  • 5:00 Eurozone Trade Balance. Estimate 22.4B. Actual 23.8B

*All release times are GMT

*Key events are in bold

CAC, Thursday, February 15 at 6:25 EDT

Open: 5,210.20 High: 5,255.50 Low: 5,207.50 Close: 5,241.75

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

DAX Climbs as Investors Ignore Spike in US Consumer Inflation

The DAX index has posted strong gains in the Thursday session. Currently, the index is trading at 12,453.00, up 0.92% since the Wednesday close. In the eurozone, trade surplus continues to grow, climbing to EUR 23.8 billion. This beat the forecast of EUR 22.4 billion. On Friday, Germany releases the Wholesale Price Index, which is expected to rebound with a gain of 0.2%.

European stock markets are higher on Thursday, as company earnings from major European corporations have been strong. The bank sector has posted strong gains, and this is reflected in bank shares on the DAX – Commerzbank is up 2.39%, and Deutsche Bank is close behind at 2.04%. It has been a blue February for the DAX, which has slipped 5.9%, as global stock markets endured a sharp correction last week. This week has seen some improvement, and US markets were up on Wednesday, despite soft retail sales as well as higher inflation. The recent sell-off was triggered by concern that stronger inflation would lead to an acceleration in rate hikes. So far, the stronger CPI numbers out of the US have not spooked investors.

The recent stock market turbulence has triggered volatility in the currency markets, and this is causing concern at the ECB. Last week, ECB President Mario Draghi said that he is more confident that eurozone inflation is moving closer to the Bank’s target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro’s exchange rates. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are on the lookout for hints as to whether the ECB will normalize policy and wind up stimulus in September.

Economic Calendar

Thursday (February 15)

  • 5:00 Eurozone Trade Balance. Estimate 22.4B. Actual 23.8B

Friday (February 16)

  • 2:00 German WPI. Estimate 0.2%

*All release times are EST

*Key events are in bold

DAX, Thursday, February 15 at 6:00 EDT

Open: 12,446.00 High: 12,480.28 Low: 12,400.69 Close: 12,453.00

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

EUR/USD – Euro Rise Continues on Broad Dollar Weakness

The euro continues its upward movement and has posted gains in the Thursday session.  Currently, the pair is trading at 1.2483, up 0.27% on the day. In the eurozone, the trade surplus continues to grow, climbing to EUR 23.8 billion. This beat the forecast of EUR 22.4 billion. It’s a busy day in the US, highlighted by PPI and Core PPI reports for January. Both indicators are expected to record gains after declining in the December readings. The US will also release key manufacturing reports and unemployment claims. On Friday, the US releases key housing and consumer confidence numbers.

The euro has posted winning sessions every day this week, and continues to move upwards on Thursday. The euro has gained 1.8% this week, and posted strong gains on Wednesday, after the US releases pointed to stronger inflation and dismal retail sales.

The US dollar remains under strong pressure after Wednesday’s CPI and retail sales reports. CPI jumped 0.5%, above the estimate of 0.3%. Consumer spending reports in January were dismal. Retail Sales was flat at 0.0%, short of the estimate of 0.5%. Core Retail Sales declined 0.3%, well off the forecast of +0.2%. A catalyst for the recent market sell-off was fear of higher inflation, and with inflation indicators pointing upwards, the dollar and the stock markets could be in for rough ride in the coming weeks.

The recent stock market turbulence has triggered volatility in the currency markets, and this is causing concern at the ECB. Last week, ECB President Mario Draghi said that he is more confident that eurozone inflation is moving closer to the Bank’s target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro’s exchange rates. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are on the lookout for hints as to whether the ECB will normalize policy and wind up stimulus in September.

At the Edge of a Cliff

EUR/USD Fundamentals

Thursday (February 15)

  • 4:00 Italian Trade Balance. Estimate 4.44B. Actual 5.25B
  • 5:00 Eurozone Trade Balance. Estimate 22.4B. Actual 23.8B
  • Tentative – Spanish 10-year Bond Auction. Actual 1.58%
  • 8:30 US PPI. Estimate 0.4%
  • 8:30 US Core PPI. Estimate 0.2%
  • 8:30 US Empire State Manufacturing Index. Estimate 17.7
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.5
  • 8:30 US Unemployment Claims. Estimate 229K
  • 9:15 US Capacity Utilization Rate. Estimate 78.0%
  • 9:15 US Industrial Production. Estimate 0.2%
  • 10:00 US NAHB Housing Market Index. Estimate 72
  • 10:30 US Natural Gas Storage. Estimate -193B
  • 16:00 US TIC Long-Term Purchases. Estimate 50.3B

Friday (February 16)

  • 2:00 German WPI. Estimate 0.2%
  • 8:30 US Building Permits. Estimate 1.29M
  • 8:30 US Housing Starts. Estimate 1.23M
  • 8:30 US Import Prices. Estimate 0.6%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 95.4

*All release times are GMT

*Key events are in bold

EUR/USD for Thursday, February 15, 2018

EUR/USD for February 14 at 5:30 EDT

Open: 1.2450 High: 1.2510 Low: 1.2448 Close: 1.2483

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2286 1.2357 1.2481 1.2569 1.2660 1.2751

EUR/USD continues to break through resistance lines. The pair inched higher in the Asian session and has recorded stronger gains in European trade

  • 1.2481 has switched to a support role after gains by the pair on Thursday
  • 1.2569 is the next resistance line

Further levels in both directions:

  • Below: 1.2481, 1.2357, 1.2286 and 1.2200
  • Above: 1.2569, 1.2660 and 1.2751
  • Current range: 1.2481 to 1.2569

OANDA’s Open Positions Ratio

EUR/USD ratio is showing gains in short positions, as EUR/USD continues to move higher and cover long positions. Currently, short positions have a majority (61%), indicative of EUR/USD reversing directions and moving to lower ground.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

CAC Climbs on Strong German, Eurozone GDP Reports

The CAC index has posted strong gains in the Wednesday session. Currently, the index is at 5,155.30, up 0.91% on the day. It’s a busy day on the release front, with key releases in Germany, the eurozone and the US. In Germany Preliminary GDP posted a gain of 0.6%, matching the estimate. Eurozone Flash GDP for Q4 remained steady at 0.6% for a third straight quarter, matching the estimate. In the US, the markets are expecting mixed inflation numbers. Core CPI is expected to expected to edge lower to 0.2%, while CPI is forecast to improve to 0.1%.

It’s been a rough ride for the CAC, which declined 3.6% last week and has plunged 6.9% so far this month. However, the index has steadied this week, and is in green territory on Wednesday. The CAC is up almost 1%, and the strong gains have been pared by sharp losses in the banking sector, as Credit Agricole is down 3.33%. Much of the recent sell-off can be attributed to investor concern over higher inflation in the US, which could lead to raise hikes from the Federal Reserve and other central banks. Inflation has also moved higher in the eurozone, although with plenty of slack in the economy, the ECB is not contemplating any rate hikes. Investors across the globe, who endured a massive sell-off last week, will be keeping a close eye on US inflation indicators. If these releases are higher than expected, global stock markets could resume their downward spiral.

ECB President Mario Draghi said last week that he is more confident that eurozone inflation is moving closer to the ECB target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro’s exchange rates. Draghi’s concerns about the exchange rate have been underscored by last week’s stock market turbulence, which boosted the dollar and sent the euro lower by 1.6 percent. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are looking for hints as to whether the ECB will normalize policy and wind up stimulus in September.

Economic Calendar

Wednesday (February 14)

  • 5:00 Eurozone Flash GDP. Estimate 0.6%. Actual 0.6%
  • 8:30 US CPI. Estimate 0.3%
  • 8:30 US Core CPI. Estimate 0.2%

Thursday (February 15)

  • 5:00 Eurozone Trade Balance. Estimate 22.4B

*All release times are GMT

*Key events are in bold

CAC, Wednesday, February 14 at 2:25 EDT

Open: 5,131.50 High: 5,158.50 Low: 5,127.80 Close: 5,155.30

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

DAX Gains Ground on German, Eurozone Growth

The DAX index has posted losses in the Wednesday session. Currently, the index is trading at 12,277.50, up 0.67% since the Tuesday close. In Germany, Preliminary GDP slowed in the fourth quarter to 0.6%, but still matched the estimate. Final CPI declined 0.7%, also matching the forecast. Eurozone Flash GDP for Q4 remained steady at 0.6% for a third straight quarter, matching the estimate. In the US, the markets are expecting mixed inflation numbers. Core CPI is expected to expected to edge lower to 0.2%, while CPI is forecast to improve to 0.1%.

European markets have given a thumbs-up to German and Eurozone GDP reports. Both indicators showed respectable gains of 0.6% in the fourth quarter. On an annual basis, Eurozone GDP was up by 2.7%, underscoring the strong rebound in the eurozone economy in 2017. The DAX is marginally higher last week, after sliding 7.6% last week. In the banking sector, stocks are in green territory on Wednesday. Commerzbank has posted strong gains of 1.24%, and Deutsche Bank has gained 0.24%.

Investors across the globe, who endured a massive sell-off last week, will be keeping a close eye on US inflation indicators. Concern over higher inflation and additional rate hikes was a catalyst to the volatility in the stock markets, and any whiff of higher consumer inflation could again spook investors and send the markets into a tailspin. The new head of the Federal Reserve, Jerome Powell, sought to send a reassuring message on Tuesday, saying that the Fed is on alert to any risks to financial stability. However, it is clear that the Fed’s hand is limited when it comes to stock markets moves, and the volatility which we saw last week could resume at any time.

Economic Calendar

Wednesday (February 14)

  • 2:00 German Preliminary GDP. Estimate 0.6%. Actual 0.6%
  • 2:00 German Final CPI. Estimate -0.7%. Actual -0.7%
  • 3:00 German Buba President Weidmann Speaks
  • 5:00 Eurozone Flash GDP. Estimate 0.6%. Actual 0.6%
  • Tentative – German 30-year Bond Auction
  • 8:30 US CPI. Estimate 0.3%
  • 8:30 US Core CPI. Estimate 0.2%

Thursday (February 15)

  • 5:00 Eurozone Trade Balance. Estimate 22.4B

*All release times are EST

*Key events are in bold

DAX, Wednesday, February 14 at 6:35 EDT

Open: 12,315.50 High: 12,318.46 Low: 12,263.50 Close: 12,277.50

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

EUR/USD – Euro Unchanged as German GDP, CPI Matches Forecasts

The euro has shown some movement in both directions but is unchanged in the Wednesday session.  Currently, the pair is trading at 1.2356, up 0.04% on the day. It’s a busy day for fundamentals, with key releases out of the eurozone and the US. In Germany, Preliminary GDP slowed to 0.6% in the fourth quarter, matching the estimate. Final CPI declined 0.7%, also matching the forecast. Eurozone Flash GDP for Q4 remained steady at 0.6% for a third straight quarter, matching the estimate. In the US, the markets are expecting mixed inflation numbers. Core CPI is expected to expected to edge lower to 0.2%, while CPI is forecast to improve to 0.1%. The US will also release retail sales reports. Retail Sales is forecast to slow to 0.2%, while Core CPI is forecast to accelerate to 0.5%. Traders should be prepared for movement from EUR/USD during the North American session.

The stock market sell-off has triggered some volatility in the currency markets, and this is causing concern at the ECB. Last week, ECB President Mario Draghi said that he is more confident that eurozone inflation is moving closer to the Bank’s target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro’s exchange rates. Draghi’s concerns about the exchange rate are likely even stronger, after the euro fell 1.6 percent last week. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are on the lookout for hints as to whether the ECB will normalize policy and wind up stimulus in September.

Global stock markets have steadied after last week’s turbulence, but investors remain wary. Wednesday’s US inflation numbers will be closely watched, as inflation fears was a key catalyst of the massive sell-off. The new head of the Federal Reserve, Jerome Powell, sought to send a reassuring message on Tuesday, saying that the Fed is on alert to any risks to financial stability. However, it is clear that the Fed’s hand is limited when it comes to stock markets moves, and the volatility which we saw last week could resume at any time.

The day of reckoning

 

EUR/USD Fundamentals

Wednesday (February 14)

  • 2:00 German Preliminary GDP. Estimate 0.6%. Actual 0.6%
  • 2:00 German Final CPI. Estimate -0.7%. Actual -0.7%
  • 3:00 German Buba President Weidmann Speaks
  • 4:00 Italian Preliminary GDP. Estimate 0.4%. Actual 0.3%
  • 5:00 Eurozone Flash GDP. Estimate 0.6%. Actual 0.6%
  • 5:00 US Industrial Production. Estimate 0.1%. Actual 0.4%
  • Tentative – German 30-year Bond Auction
  • 8:30 US CPI. Estimate 0.3%
  • 8:30 US Core CPI. Estimate 0.2%
  • 8:30 US Core Retail Sales. Estimate 0.2%
  • 8:30 US Retail Sales. Estimate 0.5%
  • 10:00 US Business Inventories. Estimate 0.3%
  • 10:30 US Crude Oil Inventories. Estimate 2.8M

Thursday (February 15)

  • 5:00 Eurozone Trade Balance. Estimate 22.4B
  • 8:30 US PPI. Estimate 0.4%
  • 8:30 US Empire State Manufacturing Index. Estimate 17.7
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.5
  • 8:30 US Unemployment Claims. Estimate 229K

*All release times are GMT

*Key events are in bold

 

EUR/USD for Wednesday, February 14, 2018

EUR/USD for February 14 at 6:00 EDT

Open: 1.2351 High: 1.2393 Low: 1.2346 Close: 1.2356

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2092 1.2200 1.2286 1.2357 1.2481 1.2569

EUR/USD inched higher in the Asian session and has retracted in European trade

  • 1.2286 is providing support
  • 1.2357 was tested earlier in resistance and is under strong pressure

Further levels in both directions:

  • Below: 1.2286, 1.2200, 1.2092 and 1.1961
  • Above: 1.2357, 1.2481 and 1.2569
  • Current range: 1.2286 to 1.2357

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Wednesday session. Currently, short positions have a majority (54%), indicative of EUR/USD breaking out and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.