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Forex Flash: EUR/USD downside primed to accelerate – Westpac

FXstreet.com (Barcelona) - Regionwide advance May PMI (Thursday) the key release for the week. Already released May ZEW survey for Germany and the Eurozone suggest another month of sub- 50 readings for much of the region. The May German IFO survey (likely soft) is due Friday. Bevy of ECB speakers on tap including Draghi (Thursday) - keep an eye out any comments around a credit/lending scheme.

According to Sean Callow, a Global FX Strategist at Westpac, “The EUR/USD is probing lower levels but it has not borne the brunt of USD strength. Expect it’s just a matter of time before EUR/USD downside accelerates. A dovish tilt to Bernanke’s testimony will offer a reprieve but expect downside to resume soon enough, perhaps as soon as the following day when regionwide May advance PMI’s are slated for release.”

In addition, the EUR/AUD worth a sell into long term resistance at 1.32 if seen while EUR/CHF is a high conviction short above 1.2500 especially given Spanish and Italian 2yr spreads to bunds have been quietly drifting out in recent sessions

US EIA Natural Gas Storage change (May 10): 99B vs 88B

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25. Forex Flash: Appetite towards fund-flows salient post 2007-crisis – Goldman Sachs

Retail appetite for fixed income assets—and retail aversion towards equity—has been one of the most salient post-crisis developments. The mutual fund complex is probably the area where the retail preference for fixed income manifests itself most visibly. According to the Economics Research Team at Goldman Sachs, “The ownership shares of mutual funds and exchange-traded funds (ETFs) in the corporate and municipal bond markets and more specifically, the contrast between fixed income and equity markets is striking.” The ownership share of mutual funds in the investment grade corporate bond market has almost doubled since 2008, going from 9% to 18% as of the end of last year, whereas the ownership share of households and mutual funds in the equity market has remained roughly flat.
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