Breaking News

Dollar Not Weak, EUR Is Strong

By Market Pulse (Dean Popplewell)ForexNov 14, 2017 06:23AM ET
Dollar Not Weak, EUR Is Strong
By Market Pulse (Dean Popplewell)   |  Nov 14, 2017 06:23AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Tuesday November 14: Five things the markets are talking about

Overnight, European equities have shrugged off the broad-based declines in Asian stocks as better-than-expected German growth data this morning is boosting market confidence (preliminary Q3 GDP +0.8% vs. +0.6%).

In Fixed income, sovereign bond prices are under pressure as the world’s most powerful central bankers gather in Frankfurt.

While in currencies, the EUR (€1.1717) remains better bid, while the pound (£1.3098) trades somewhat steady.

Currently, the markets focus of attention is on the European Central Banks (ECB) conference featuring appearances from ECB’s Draghi, the Fed’s Yellen, the BoE’s Carney and BoJ’s Kuroda.

Elsewhere, U.S inflation and retail sales numbers tomorrow are expected to influence the Fed’s interest-rate hike odds, while U.S tax overhaul discussions remain ongoing.

1. Global equities struggle

Asian regional equities completed a third consecutive day of declines after China’s industrial production (see below) came in lower than market expectations.

In Japan, the Nikkei share average ended little changed overnight in choppy trade, while the broader Topix slipped -0.25%.

Down-under, Australia’s S&P/ASX 200 index dropped -0.9% and the KOSPI index in Seoul slid -0.2%.

In Hong Kong, shares finished down after data showed the mainland economy cooled further last month.

Note: China’s economy lost steam in October, with industrial output (+6.2% vs. +6.5%), fixed asset investment (+7.3% vs. +7.5%) and retail sales (+10% vs. +10.5%) missing expectations as the government extended a crackdown on debt risks and factory pollution.

The Hang Seng index fell -0.1%, while the China Enterprises Index lost -0.7%.

In China, the blue-chip index posted its worst day since mid-August on the weaker data. The CSI 300 index was down -0.7%, while, the Shanghai Composite was down -0.52%.

In Europe, regional indices trade little changed in a relatively flat session, coming off the earlier highs as the Euro strengthens on better German GDP and ZEW (18.7 vs. 17.6) numbers.

In the U.S, stocks are set to open up in the red (-0.1%).

Indices: STOXX 600 -0.2% at 385.5, FTSE +0.1% at 7425, DAX +0.1% at 13085, CAC 40 +0.1% at 5347, IBEX 35 +0.2% at 10066, FTSE MIB +0.2% at 22487, SMI flat at 9158, S&P 500 Futures -0.1%

Brent Crude Oil
Brent Crude Oil

2. Oil is steady, tempered by caution over rising U.S output, gold lower

Oil prices are little changed as the prospect of further rises in U.S output is offsetting some of the optimism that OPEC led production cuts would tighten the balance between crude supply and demand.

Brent crude futures are at +$63.11 per barrel, down -5c, while U.S West Texas Intermediate (WTI) crude is down -13c at +$56.63.

Note: Both benchmarks managed to print two-year highs last week.

Recent EIA data continues to show the extent of rising U.S. oil output – it has grown by more than +14% since mid-2016 to a record +9.62m bpd. Yesterday, the U.S government said that U.S shale production in December would rise for a 12th consecutive month, increasing by +80k bpd.

Note: A cooling Chinese economy has also stoked some concerns about demand, although so far the country’s refiners are processing crude oil near record levels of +11.89m bpd.

Ahead of the U.S open, gold prices have inched down, hurt by higher U.S Treasury yields amid uncertainty over the outlook for tax reforms stateside. Spot gold is down -0.1% at +$1,276.26 per ounce.


3. German yields rally on data

Eurozone bond yields have rallied across the board as strong growth in Germany has pushed the ‘single’ unit higher and increased the case for tighter monetary policy.

The yield on Germany’s 10-Year bund has backed up to +0.43% on this morning’s German GDP print.

Note: The target for central banks is ‘inflation’ – GDP growth is important, but central bank’s mandate is inflation.

Elsewhere, the yield on 10-year U.S Treasuries have gained less than +1 bps to +2.41%, hitting the highest in almost three weeks with its fifth straight advance. In the U.K, the 10-year Gilt yield has climbed +1 bps to +1.339%.


4. Dollar not weak, EUR is strong

Strong German economic growth data this morning has pushed the EUR (€1.1720) to a three-week high – the economy is growing at annualized rate of more than +3%. Coupled with higher Euro bond yields would suggest the market is pricing in an end to ECB stimulus.

Elsewhere, the pound (£1.3090) remains under pressure after slightly softer than forecast inflation (see below). The currency is also pressured on concerns that PM Theresa May might be losing her grip on power.

Note: May’s blueprint for the U.K’s departure from the E.U faces a test starting today, when lawmakers try to win concessions on legislation to sever ties.

The dollar is up +0.2% at ¥113.88 after bouncing from ¥113.25 support levels overnight.


5. U.K inflation flat in October

Data this morning showed that annual inflation in the U.K. held steady at +3% in October, suggesting a surge in prices fueled by a steep fall in the pound (£1.3088) after last year’s referendum on E.U membership may be coming to an end.

Market consensus had been expecting a pickup, to +3.1%. Data from the Office for National Statistics also show that wholesale prices grew at the slowest rate for a year.

Bank of England (BoE) had said they expected consumer price-growth to peak in October as the effect of the devaluation fades.

Nevertheless, data continues to show that U.K prices are still rising faster than wages, suggesting consumer spending will remain subdued unless wage growth picks up.

Note: Earlier this month, BoE policymakers increased borrowing costs for the first time in a decade, reversing the emergency -25 bps cut enacted shortly after Brexit.

Global FX
Global FX

Original post

Dollar Not Weak, EUR Is Strong

Related Articles

Dollar Not Weak, EUR Is Strong

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email