Dollar Regains Ground Ahead of Fed Minutes

Higher US inflation fails to spark dollar revival

The US dollar depreciated across the board versus major pairs despite consumer prices rising more than expected. Inflation anxiety had triggered a sell-off in global stock markets with the Fed expected to ramp up their interest rate hike path yet the dollar did not benefit as higher rates have already been priced in by the market. Fiscal uncertainty driven by political factors continue to confound investors with stock indices rebounding this week and the dollar hitting a 2014 low. The paradox in consumer spending and retail sales continues as Americans remain confident in the economic outlook yet core retail sales remain flat and taking into consideration auto sales they actually dropped by 0.5 percent. The dollar showed some signs of life on Friday as it gained against a basket of major pairs, but not enough to offset the losses earlier in the week.

  • Fed to release minutes of January meeting
  • Kuroda renominated as Governor of Bank of Japan (BOJ)
  • Lower trading activity with start of Chinese New Year celebrations and 3 day weekend in NA

Dollar Recovers on Friday But Still Underwater this Week



The EUR/USD gained 1.62 percent in the last five days. The single currency is trading at 1.2448 with the EUR recovering against the earlier losses versus the USD suffered earlier in the month. US inflation rose more than expected and US treasuries dropped in prices as investors sold them anticipating higher rates this year. Bond yields rose with the 10 year at four year highs (2.93 percent). The correlation between higher yields and a stronger currency is broken at the moment for the USD as the confidence in the stability of the US economy is up for debate. Fundamentals are strong and would point to a higher dollar, but political uncertainty around fiscal stimulus has made it hard to quantify the effects of actual and proposed legislation on the currency. The U.S. Federal Reserve will publish the minutes from its January Federal Open Market Committee (FOMC) meeting on Wednesday, February 21 at 2:00 pm EST. The meeting was the last presided by Chair Janet Yellen and is not expected to bring any surprises, but could prepare the market on what to expect in March when Chair Jerome Powell heads his first FOMC.

The USD went through a topsy-turvy week, with Wednesday’s release of consumer price index data providing the most volatility. The market forecasts were slightly improved with a 0.3 percent monthly gain. The employment report in February 2 was the first data point that suggested a stronger inflationary pressure. Stock markets had already suffered two difficult weeks and the dollar rose as the inflation data was released only to quickly give back all gains and end up in the red.

President’s day in the US will give some investors a much needed rest from a high octane trading week. The Lunar New Year celebrations will also affect trading volumes as Hong Kong and China markets will remain closed until Thursday. Stock markets had a positive week after stronger corporate results erased earlier losses.



The USD/JPY lost 2.38 percent during the week. The currency pair is trading at 106.19 as the JPY keeps gaining. The government issued a statement where it was clear there is no need for intervention and the market took it as a sign to keep buying the yen. The tone changed slightly on Friday as the currency kept appreciating and there were some warning that the trade is one sided. The softness of the USD and uncertainty about how the American government will deal with growing twin deficits and political drama has boosted the JPY due to some safe haven flows.

The reappointment of BOJ Governor Haruhiko Kuroda along with other nominations of economist who favour further easing did not factor into Yen pricing in the short term, but should impact the growing gap between rates in Japan and the United States. In the short term, lack of stability in politics and fiscal uncertainty are overriding higher growth and interest rate expectations in the US.



Oil prices advanced during the week. The price of West Texas Intermediate is trading at $61.21 with most of the gains in energy coming from dollar softness. Oil prices suffered losses earlier in the month as higher production in Canada, Brazil and the United States is anticipated given the high prices and producers in those nations not bound to the Organization of the Petroleum Exporting Countries (OPEC) production cut agreement. Lack of traction of the US currency is keeping prices above $60.

A small rise in oil rigs in Baker Hughes was not enough to derail energy prices specially with an underlying weak US dollar. The OPEC agreement with other major producers has stabilized oil prices after the freewill caused by overproduction. The question remains if demand for energy has recovered to the point that even after the agreement timeline runs out supply will not once again outweigh demand causing another drop in prices.

Market events to watch this week:

Monday, February 19
7:30pm AUD Monetary Policy Meeting Minutes
Wednesday, February 21
4:30am GBP Average Earnings Index 3m/y
9:15am GBP Inflation Report Hearings
2:00pm USD FOMC Meeting Minutes
Thursday, February 22
4:30am GBP Second Estimate GDP q/q
8:30am CAD Core Retail Sales m/m
11:00am USD Crude Oil Inventories
4:45pm NZD Retail Sales q/q
Friday, February 23
8:30am CAD CPI m/m

*All times EST
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

DAX Gains Ground as Dollar Under Pressure

The DAX index has posted considerable gains in the Friday session. Currently, the index is trading at 12,418.30, up 0.58% since the Wednesday close. On the release front, the sole release was the German Wholesale Price Index, which rebounded with a strong gain of 0.9%, crushing the estimate of 0.2%.

It’s been a dismal February for the DAX, which has shed 6.1%. However, the index has steadied, and appears headed towards its first winning week since January. The catalyst for the turnaround after the recent sell-off is strong corporate earnings in Europe. European stock markets have taken their cue from US markets, which have posted gains this week at the expense of the weaker US dollar.

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

Friday (February 16)

  • 2:00 German WPI. Estimate 0.2%. Actual 0.9%

*All release times are EST

*Key events are in bold

 

DAX, Friday, February 16 at 6:10 EDT

Open: 12,408.29 High: 12,483.50 Low: 12,368.00 Close: 12,418.30

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.

EUR/USD – Euro Hits 3-Year Higher as German Inflation Jumps

The euro rally is steady in the Friday session. Currently, the pair is trading at 1.2503, down 0.02% on the day. On the release front, the German Wholesale Price Index climbed 0.9% in January, rebounding from a reading of 0.3% in December. In the US, Building Permits is expected to inch lower to 1.30 million, and Housing Starts are projected to improve to 1.23 million. As well, UoM Consumer Sentiment is expected to rise to 95.4 points.

The euro continues to trade above the 1.25 level this week. Earlier on Friday, EUR/USD touched its highest level since December 2014, as the US dollar remains under broad pressure. The euro has posted winning sessions every day this week, and the currency has gained 2.1% this week. US inflation indicators pointed upwards this week, but investors chose to focus on soft retail sales reports for January – Retail Sales posted a flat reading of 0.0%, and Core Retail Sales declined 0.3%, marking its first decline in five months.

The recent volatility in the currency markets has not gone unnoticed by Mario Draghi & Co. Last week, the ECB head expressed confidence 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. Any hints from ECB policymakers about a change in policy could have a strong impact on the movement of the euro.

US Bond Auction TIPS the dollar

EUR/USD Fundamentals

Friday (February 16)

  • 2:00 German WPI. Estimate 0.2%. Estimate 0.9%
  • 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
  • 10:00 US Preliminary UoM Inflation Expectations

*All release times are GMT

*Key events are in bold

 

EUR/USD for Friday, February 16, 2018

EUR/USD for February 16 at 5:40 EDT

Open: 1.2506 High: 1.2556 Low: 1.2497 Close: 1.2503

EUR/USD Technical

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

EUR/USD posted gains in the Asian session but has retracted in European trade

  • 1.2481 is providing support role
  • 1.2569 is a weak 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 little movement in the Friday session. Currently, short positions have a majority (63%), 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.

Gold Takes Breather After Strong Gains

Gold prices is trading sideways in the Thursday session, after surging higher on Wednesday. Currently, the spot price for an ounce of gold is $1351.30, up 0.05% on the day. On the release front, PPI gained 0.4%, matching the forecast. Core PPI also gained 0.4%, beating the estimate of 0.2%. Both indicators rebounded after declines in the previous month. Unemployment Claims climbed to 230 thousand, just above the estimate of 229 thousand. Manufacturing data was mixed. The Empire State Manufacturing Index continues to slow down, and dropped to 13.1, missing the estimate of 17.7 points.The Philly Fed Manufacturing Index rose to 25.8, easily beating the estimate of 21.5 points. On Friday, the US releases key housing and consumer confidence numbers.

The US dollar has sagged against the major currencies, and gold has jumped on the bandwagon. On Thursday, gold jumped 1.6% on disappointing retail sales reports. Concerns of high inflation was a catalyst for the market sell-off last week, and fears of a resumption in the downward spiral are weighing on the dollar. If investors react negatively and ditch the markets yet again, safe-haven assets like gold will likely be the big winners. Gold prices were down in the first half of February, but gold has recovered these losses, after posting strong gains of 2.7% this week. US fundamentals remain solid, as the US economy is showing strong expansion, the labor market remains at capacity, and inflation levels are moving higher. This has led some analysts to attribute the recent sag in the US dollar to technical factors rather than fundamental reasons.

The new head of the Federal Reserve, Jerome Powell, received a rude welcome from the stock markets, as he started his new position last week. 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.Currently, the Fed is planning three hikes this year, but that could change to four or even five hikes, if inflation continues to head upwards and the robust US economy maintains its strong expansion.

 

XAU/USD Fundamentals

Thursday (February 15)

  • 8:30 US PPI. Estimate 0.4%. Actual 0.4%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.4%
  • 8:30 US Empire State Manufacturing Index. Estimate 17.7. Actual 13.1
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.5. Actual 25.8
  • 8:30 US Unemployment Claims. Estimate 229K. Actual 230K
  • 9:15 US Capacity Utilization Rate. Estimate 78.0%. Actual 77.5%
  • 9:15 US Industrial Production. Estimate +0.2%. Actual -0.1%
  • 10:00 US NAHB Housing Market Index. Estimate 72. Actual 72
  • 10:30 US Natural Gas Storage. Estimate -193B. Actual -194B
  • 16:00 US TIC Long-Term Purchases. Estimate 50.3B

Friday (February 16)

  • 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 EST

*Key events are in bold

 

XAU/USD for Thursday, February 15, 2018

XAU/USD February 15 at 12:15 EST

Open: 1350.66 High: 1357.19 Low: 1348.61 Close: 1351.30

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1285 1307 1337 1375 1416 1433
  • XAU/USD posted slight gains in the Asian session but retracted in European trade. The pair is showing limited movement in North American trade
  • 1337 is supporting support
  • 1375 is the next resistance line
  • Current range: 1337 to 1375

Further levels in both directions:

  • Below: 1337, 1307, 1285 and 1260
  • Above: 1375, 1416 and 1433

OANDA’s Open Positions Ratio

XAU/USD ratio is showing movement towards long position. Currently, long positions have a majority (55%), indicative of trader bias towards XAU/USD breaking out and moving higher.

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.

GBP/USD – Pound Higher as Sentiment Remains Negative on Greenback

The British pound continues to head higher this week. In North American trade, GBP/USD is trading at 1.4067, up 0.48% on the day. On the release front, there are no British events on the schedule. In the US, PPI gained 0.4%, matching the forecast. Core PPI also gained 0.4%, beating the estimate of 0.2%. Both indicators rebounded after declines in the previous month. Unemployment Claims climbed to 230 thousand, just above the estimate of 229 thousand. On Friday, the US releases key housing and consumer confidence numbers. The UK will release Retail Sales.

The pound has posted winning sessions every day this week, and has continued the upward trend on Thursday. GBP/USD has gained 1.7% this week, and punched above the 1.41 line earlier on Thursday. The pound posted strong gains on Wednesday, as US consumer spending reports were weaker than expected. Still, US fundamentals remain solid, as the US economy is showing strong expansion, the labor market remains at capacity, and inflation levels are moving higher. This has led some analysts to attribute the recent sag in the US dollar to technical factors rather than fundamental reasons.

With US inflation indicators pointing higher in January, the Fed will be reevaluating its projection for rate hikes in 2018. Currently, the Fed is planning three hikes this year, but that could change to four, or even five hikes, if inflation continues to head upwards and the robust US economy maintains its strong expansion.  The new head of the Federal Reserve, Jerome Powell, received a rude welcome from the stock markets, as he started his new position last week. 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.

GBP/USD Fundamentals

Thursday (February 15)

  • 8:30 US PPI. Estimate 0.4%. Actual 0.4%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.4%
  • 8:30 US Empire State Manufacturing Index. Estimate 17.7. Actual 13.1
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.5. Actual 25.8
  • 8:30 US Unemployment Claims. Estimate 229K. Actual 230K
  • 9:15 US Capacity Utilization Rate. Estimate 78.0%. Actual 77.5%
  • 9:15 US Industrial Production. Estimate +0.2%. Actual -0.1%
  • 10:00 US NAHB Housing Market Index. Estimate 72. Actual 72
  • 10:30 US Natural Gas Storage. Estimate -193B. Actual -194B
  • 16:00 US TIC Long-Term Purchases. Estimate 50.3B

Friday (February 16)

  • 4:30 British Retail Sales. Estimate 0.5%
  • 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

GBP/USD for Thursday, February 15, 2018

GBP/USD February 15 at 11:30 EDT

Open: 1.3999 High: 1.4100 Low: 1.3995 Close: 1.4067

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3809 1.3901 1.4010 1.4128 1.4271 1.4345

GBP/USD continues to break through resistance levels. On Thursday, GBP/USD inched higher in the Asian session. In European trade, the pair posted considerable gains. GBP/USD edged higher in North American trade but has given up these gains

  • 1.4010 is providing support
  • 1.4128 is the next line of resistance

Current range: 1.4010 to 1.4128

Further levels in both directions:

  • Below: 1.4010, 1.3901, 1.3809 and 1.3744
  • Above: 1.4128,, 1.4271 and 1.4345

OANDA’s Open Positions Ratio

GBP/USD ratio is showing gains in long positions. Currently, short and long positions are evenly split, indicative of a lack of trader bias as to what direction GBP/USD will take next.

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.

US 10 Year Yield Reaches Four Year High

U.S. government debt yields notched new highs Thursday amid of a slew of new economic data that provided more evidence of inflation pressure.

The yield on 10-year U.S. Treasury touched a fresh four-year high of 2.944 percent, above the levels which sparked a stock market sell-off in recent weeks. The 2-year Treasury yield hit a high of 2.213 percent, its highest level since September 2008, when the 2-year yielded as high as 2.217 percent.

The 5-year yield also hit a high, touching 2.687 percent, its highest level since April 2010 when the 5-year yielded as high as 2.702 percent.



The yield on the benchmark 10-year Treasury note slipped from its highs to 2.904 percent at 9:23 a.m. ET, while the yield on the 30-year Treasury bond also off session highs at 3.148 percent. Bond yields move inversely to prices.

The rise comes amid inflation data, which showed that the producer price index (PPI) increased 0.4 percent last month, with core PPI — excluding volatile food and energy prices —also up 0.4 percent, according to the Labor Department.

via CNBC

Cyril Ramaphosa Sworn in as South Africa’s New President

African National Congress (ANC) leader Cyril Ramaphosa has been sworn in as South Africa’s new president, following his predecessor Jacob Zuma’s departure Wednesday night after a long power struggle.

Ramaphosa, 65, was formerly Zuma’s deputy president. He was elected leader of the ruling ANC in December, narrowly defeating Zuma’s chosen candidate, his ex-wife Nkosazana Dlamini-Zuma.



The new president’s resume includes both politics and business. Ramaphosa is one of South Africa’s richest men, with an estimated net worth of $450 million.

A lawyer by profession from Soweto, Ramaphosa was detained for anti-apartheid activism twice during the 1970s. He launched South Africa’s most powerful trade union, the National Union of Mineworkers, in 1982.

Ramaphosa served as the ANC’s chief negotiator ahead of South Africa’s transition to democracy, and chairman of the committee which facilitated former President Nelson Mandela’s release from prison in 1990.

via CNBC

USD/CAD – Canadian Dollar Gains Ground After Dismal US Retail Sales

The Canadian dollar has paused on Thursday, after posting strong gains a day earlier. Currently, USD/CAD is trading at 1.2491, down 0.01% on the day. On the release front, Canada releases ADP Non-farm Employment Change. In the US, there are a host of indicators, 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. Canada will publish Manufacturing Sales.

It’s been a rough February for the Canadian dollar, but the currency jumped on the bandwagon on Wednesday, as the US dollar posted broad losses. The Canadian currency posted its best one-day performance in 2018, gaining 0.09% against the greenback. The US dollar sagged as investors focused on poor retail sales reports in January. 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%. On the inflation front, CPI jumped 0.5%, above the estimate of 0.3%. Last week’s market sell-off, which sent the US dollar higher against other currencies, was triggered by fears of higher inflation. This strong CPI reading has raised concerns that investors could again lose their risk appetite and send the Canadian dollar lower.

Will the recent volatility in the markets affect interest rate policy in the US? Currently, the Fed has projected three hikes this year, but that could change to four or even five hikes, if inflation continues to head upwards and the robust US economy maintains its strong expansion.  The new head of the Federal Reserve, Jerome Powell, received a rude welcome from the stock markets, when he started his new position last week. Powell sought to send a reassuring message earlier this week, declaring 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.

 

USD/CAD Fundamentals

Thursday (February 15)

  • 8:30 Canadian ADP Non-Farm Employment Change
  • 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
  • 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)

  • 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

 

USD/CAD for Thursday, February 15, 2018

USD/CAD, February 15 at 7:50 EST

Open: 1.2491 High: 1.2503 Low: 1.2465 Close: 1.2491

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2060 1.2190 1.2351 1.2494 1.2630 1.2757

USD/CAD ticked lower in the Asian session. In European trade, the pair dropped slightly but has recovered

  • 1.2351 is providing support
  • 1.2494 was tested earlier in resistance and remains fluid
  • Current range: 1.2351 to 1.2494

Further levels in both directions:

  • Below: 1.2351, 1.2190 and 1.2060
  • Above: 1.2494, 1.2630, 1.2757 and 1.2855

OANDA’s Open Positions Ratio

USD/CAD ratio is showing slight movement towards long positions. Currently, long positions have a majority (53%), indicative of trader bias towards USD/CAD 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.

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.