CAC Steadies After Starting Week With Losses, PMIs Next

The CAC index is showing little movement in the Tuesday session. Currently, the index is at 5,259.80, up 0.07% since the close on Monday. On the release front, German and eurozone confidence reports for February beat the forecasts, but were weaker than the January releases. German ZEW Economic Sentiment came in at 17.8, beating the estimate of 16.0 points. Eurozone ZEW Economic Sentiment dropped to 29.3, above the estimate of 28.4. On Wednesday, Germany and the eurozone release manufacturing PMIs. In the US, the Federal Reserve will release the minutes of its January meeting.

 

Eurozone indicators continue to point upwards, and French manufacturing and services PMI reports have been solid, pointing to expansion in the manufacturing and services sectors. The markets are not expecting much change in the February PMIs. Strong global demand has boosted manufacturing, and steady consumer spending has buoyed the services sector. President Macron is aggressively pursuing economic reforms, and this has renewed confidence in the French economy on the part of consumers and institutional investors.

Should cryptocurrencies be regulated? The recent turbulence in the global stock markets has triggered strong volatility in the currency markets, and ECB President Mario Draghi recently stated that the ECB was concerned about the euro’s sharp fluctuations. Last week, Draghi weighed in on Bitcoin, a cryptocurrency which has seen wild fluctuations in recent months. There are growing calls for regulation of these currencies, and central banks could play a key role in such oversight. However, Draghi poured cold water on any ECB involvement, saying that it was not the ECB’s responsibility to ban or regulate Bitcoin. Draghi added that the ECB was exploring the use of blockchain, a digital technology to monitor bitcoin transactions. France and Germany want to cryptocurrencies on the agenda at the next G-20 meeting, and there is bipartisan support in Congress to adopt new rules to regulate virtual currencies.

 

Economic Calendar

Tuesday (February 20)

  • 5:00 German ZEW Economic Sentiment. Estimate 16.0. Actual 17.8
  • 5:00 Eurozone ZEW Economic Sentiment. Estimate 28.4. Actual 29.3
  • All Day – ECOFIN Meetings
  • 10:00 Eurozone Consumer Confidence. Estimate 1

Wednesday (February 21)

  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 59.2
  • 4:00 Eurozone Flash Services PMI. Estimate 57.7
  • 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

 

CAC, Tuesday, February 20 at 7:00 EDT

Open: 5,210.20 High: 5,255.50 Low: 5,207.50 Close: 5,259.80

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 Under Pressure Despite Strong German Releases

The DAX index has posted slight losses in the Tuesday session. Currently, the index is trading at 12,362.98, down 0.19% since the Monday close. On the release front, German and eurozone confidence reports for February beat the estimates, but slowed compared to the January releases. German ZEW Economic Sentiment came in at 17.8, beating the estimate of 16.0 points. Eurozone ZEW Economic Sentiment dropped to 29.3, above the estimate of 28.4. German PPI improved to 0.5%, above the estimate of 0.3%. This marked the strongest reading since January 2017. On Wednesday, Germany and the eurozone release manufacturing PMIs. In the US, the Federal Reserve will release the minutes of its January meeting.

The recent turbulence in global stock markets have sent the DAX lower, and the index has shed 5.9% in February. However, the index rebounded last week, posting a winning week for the first time since mid-January. The catalyst for the gains were positive corporate earnings in Europe. The US recently passed massive corporate and individual tax reform, worth $1.5 trillion. This could significantly boost earnings in Q1 of 2018 for European companies which have major operations in the US, such as banking giants Deutsche Bank and Commerzbank, which are listed on the DAX.

The recent turbulence in the global stock markets has triggered strong volatility in the currency markets, and ECB President Mario Draghi recently stated that the ECB was concerned about the euro’s sharp fluctuations. Last week, Draghi weighed in on Bitcoin, a cryptocurrency which has seen wild fluctuations in recent months. There are growing calls for regulation of these currencies, and central banks could play a key role in such regulation. However, Draghi poured cold water on any ECB involvement, saying that it was not the ECB’s responsibility to ban or regulate Bitcoin. Draghi added that the ECB was exploring the use of blockchain, a digital technology to monitor bitcoin transactions.  France and Germany want to cryptocurrencies on the agenda at the next G-20 meeting, and there is bipartisan support in Congress to adopt new rules to regulate virtual currencies.

Economic Calendar

Tuesday (February 20)

  • 2:00 German PPI. Estimate 0.3%. Actual 0.5%
  • 5:00 German ZEW Economic Sentiment. Estimate 16.0. Actual 17.8
  • 5:00 Eurozone ZEW Economic Sentiment. Estimate 28.4. Actual 29.3
  • All Day – ECOFIN Meetings
  • 10:00 Eurozone Consumer Confidence. Estimate 1

Wednesday (February 21)

  • 3:30 German Flash Manufacturing PMI. Estimate 60.6
  • 4:00 German Flash Services PMI. Estimate 56.9
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 59.2
  • 4:00 Eurozone Flash Services PMI. Estimate 57.7
  • 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

DAX, Tuesday, February 20 at 6:30 EDT

Open: 12,451.96 High: 12,512.00 Low: 12,426.50 Close: 12,362.98

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 Slips as German Economic Sentiment Softens

The euro has posted considerable losses on Tuesday, after a slow start to the week. Currently, the pair is trading at 1.2341, down 0.53% on the day. On the release front, German and eurozone confidence reports for February beat the estimates, but slowed compared to the January releases. German ZEW Economic Sentiment came in at 17.8, beating the estimate of 16.0 points. Eurozone ZEW Economic Sentiment dropped to 29.3, above the estimate of 28.4. German PPI improved to 0.5%, above the estimate of 0.3%. This marked the strongest reading since January 2017. There are no US releases on the schedule. On Wednesday, Germany and the eurozone release manufacturing PMIs. The Federal Reserve will release the minutes of its January meeting. As well, the US will release Existing Home Sales.

Federal Reserve chair Jerome Powell has just started his new job, and there is plenty on his plate. Strong US data in recent weeks has raised speculation that the Fed may need to accelerate the pace of interest rate hikes in 2018. The Fed is currently projecting three rate hikes this year, but if inflation continues to move upwards, many analysts are expecting that the Fed could press the rate trigger four or even five times in 2018. Meanwhile, concern over higher inflation and more rate hikes sent the stock markets into a frenzy. Powell sought to reassure the markets that the Fed was monitoring the situation, but it’s doubtful that the Fed can do much to prevent volatility in the markets.

Should cryptocurrencies be regulated? The recent turbulence in the global stock markets has triggered strong volatility in the currency markets, and ECB President Mario Draghi recently stated that the ECB was concerned about the euro’s sharp fluctuations. Last week, Draghi weighed in on Bitcoin, a cryptocurrency which has seen wild fluctuations in recent months. There are growing calls for regulation of these currencies, and central banks could play a key role in such oversight. However, Draghi poured cold water on any ECB involvement, saying that it was not the ECB’s responsibility to ban or regulate Bitcoin. Draghi added that the ECB was exploring the use of blockchain, a digital technology to monitor bitcoin transactions. France and Germany want to cryptocurrencies on the agenda at the next G-20 meeting, and there is bipartisan support in Congress to adopt new rules to regulate virtual currencies.

Higher Yields Pushing Dollar Up

EUR/USD Fundamentals

Tuesday (February 20)

  • 2:00 German PPI. Estimate 0.3%. Actual 0.5%
  • 5:00 German ZEW Economic Sentiment. Estimate 16.0. Actual 17.8
  • 5:00 Eurozone ZEW Economic Sentiment. Estimate 28.4. Actual 29.3
  • All Day – ECOFIN Meetings
  • 10:00 Eurozone Consumer Confidence. Estimate 1

Wednesday (February 21)

  • 3:00 French Flash Manufacturing PMI. Estimate 58.1
  • 3:00 French Flash Services PMI. Estimate 59.1
  • 3:30 German Flash Manufacturing PMI. Estimate 60.6
  • 4:00 German Flash Services PMI. Estimate 56.9
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 59.2
  • 4:00 Eurozone Flash Services PMI. Estimate 57.7
  • 10:00 US Existing Home Sales. Estimate 5.61M
  • 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

EUR/USD for Tuesday, February 20, 2018

EUR/USD for February 20 at 6:00 EDT

Open: 1.2407 High: 1.2412 Low: 1.2345 Close: 1.2333

EUR/USD Technical

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

EUR/USD has posted slight losses in the Asian session and continues to lose ground in European trade

  • 1.2286 is providing support
  • 1.2357 was switched to a resistance role after considerable losses by EUR/USD on Tuesday

Further levels in both directions:

  • Below: 1.2286, 1.2200 and 1.2092
  • Above: 1.2357, 1.2481, 1.2569 and 1.2660
  • Current range: 1.2286 to 1.2357

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Tuesday session. Currently, short positions have a majority (60%), indicative of EUR/USD breaking out 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.