European Session – Euro remains above 1.39 but weighed by weak German ZEW
March 18, 2014 2:38 pm
The risk environment improved in the currency markets today as the threat of armed conflict in the Ukraine began to ease, especially after Russian President Putin said that Russia doesn’t need further division in the Ukraine. His comments helped eased fears that were in the air as to how Putin would react to sanctions imposed on Russian government officials by the US and the EU on Monday in response to Russia’s desire to annex Crimea.
Market focus now switches to a key risk event which is the Federal Reserve policy meeting, held over two days and concluding on Wednesday with a policy announcement. This will be Janet Yellen’s first policy setting meeting as Chair of the Fed.
Market participants will watch closely to see if the Fed will announce another $10 billion cut in monthly bond buying to $55 billion to continue scaling back stimulus. Focus will also be on whether the Fed will drop the current unemployment threshold of 6.5% and adopt other qualitative guidance for signaling when it will consider raising the benchmark interest rate.
In terms of economic data today, the German ZEW on investor confidence dropped to the lowest since August, coming in below expectations at 46.6 in March versus 55.7 in February and 61.7 in January. There was a slight rise in current conditions, but this positive data was overshadowed by a big contraction in the Eurozone trade surplus, which came in at 0.9 billion euros versus a 12 billion forecast.
The euro dipped after the ZEW data to 1.3888. After a brief rally to a session high of 1.3941, the euro ended down 0.18% to 1.3902 in the European session.
Sterling was down 0.36% to trade at 1.6582, under pressure ahead of key events on Wednesday. The UK budget will be announced as well as UK jobs data. In other news today, there was a big shakeup at the Bank of England, where two new deputy governors were appointed.
US economic data were released today on inflation and housing. Consumer prices rose 0.1% in February 2014, which was in line with market expectations and matched the 0.1% increase in January. US housing starts were relatively unchanged in the month.
The dollar has been contained within a range since Friday and was down 0.18% in the European session to trade at 101.45.
The risk environment improved in the currency markets today as the threat of armed conflict in the Ukraine began to ease, especially after Russian President Putin said that Russia doesn’t need further division in the Ukraine. His comments helped eased fears that were in the air as to how Putin would react to sanctions imposed on Russian government officials by the US and the EU on Monday in response to Russia’s desire to annex Crimea.
Market focus now switches to a key risk event which is the Federal Reserve policy meeting, held over two days and concluding on Wednesday with a policy announcement. This will be Janet Yellen’s first policy setting meeting as Chair of the Fed.
Market participants will watch closely to see if the Fed will announce another $10 billion cut in monthly bond buying to $55 billion to continue scaling back stimulus. Focus will also be on whether the Fed will drop the current unemployment threshold of 6.5% and adopt other qualitative guidance for signaling when it will consider raising the benchmark interest rate.
In terms of economic data today, the German ZEW on investor confidence dropped to the lowest since August, coming in below expectations at 46.6 in March versus 55.7 in February and 61.7 in January. There was a slight rise in current conditions, but this positive data was overshadowed by a big contraction in the Eurozone trade surplus, which came in at 0.9 billion euros versus a 12 billion forecast.
The euro dipped after the ZEW data to 1.3888. After a brief rally to a session high of 1.3941, the euro ended down 0.18% to 1.3902 in the European session.
Sterling was down 0.36% to trade at 1.6582, under pressure ahead of key events on Wednesday. The UK budget will be announced as well as UK jobs data. In other news today, there was a big shakeup at the Bank of England, where two new deputy governors were appointed.
US economic data were released today on inflation and housing. Consumer prices rose 0.1% in February 2014, which was in line with market expectations and matched the 0.1% increase in January. US housing starts were relatively unchanged in the month.
The dollar has been contained within a range since Friday and was down 0.18% in the European session to trade at 101.45.
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