Winding down

July 26, 2016

The single currency has fallen out of the limelight, largely because there have been more dominant themes driving most of the other majors currencies in recent weeks. It’s also notable that it’s been moving away from having interest rate as the primary driver. The one month rolling correlation between EURUSD and the 2Y interest rate spread between the US and Eurozone has moved into negative territory for the first time since early 2015. Normally the positive correlation corresponds to the euro outperforming should 2Y government bond yields move in the euro’s favour. The fact that this relationship has broken down suggest that interest rates aren’t the main driver of the single currency at present. More interestingly the trading range of EURUSD has been declining, the simple 2 week average true range having fallen to nearly the lowest level of the year so far, reflecting the generally lower volatility. This now stands at 70 pips. It has also remaining within the range traded on the day after the Brexit vote, whereas other majors have broken out one side or the other.

We’re likely to see activity on the low side again today, as most are waiting for the outcome of the Fed meeting tomorrow and more so the BoJ meeting at the end of the week. Data is on the light side, with just US house price data and consumer confidence later in the day. The main move overnight has been on the yen, strengthening into the BoJ meeting later this week. This took the shine off the stock market, with Nintendo shares also falling further on the common relalisation that monetising apps is not easy, even when everyone seems to be trying to kill themselves by chasing virtual monsters round the streets.

Publication source
FxPro information  FxPro reviews

February 17, 2017
NZD looks to weaken
The New Zealand dollar has found itself under pressure in recent days as the market has started to hedge a little while it waits on the next steps for the US economy...
February 17, 2017
The dynamics of the Dollar
William Dudley, the head of the New York FED, called for a rate hike in the coming months, but only if economic growth, accelerating inflation and low unemployment, will meet the development trajectory of the FED...
February 16, 2017
The Federal Reserve balance sheet shrunk?
The Dollar has cut through a significant resistance level of 101, thus completing the retracement move after rallying to a maximum of a 14-year peak. It was not without the help from the Federal Reserve...

FOREX.com Rating
Tickmill Rating
Larson&Holz IT Ltd Rating
FIBO Group Rating
Grand Capital Rating
XM Rating

Dragon Options Rating
TropicalTrade Rating
UKoptions Rating
99Binary Rating
IQ Option Rating
OptionRally Rating