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Forex Flash: USD looks at QE3 and EUR eyes economic data - Commerzbank

Commerzbank analysts believe expectations regarding the Fed’s future approach will be the main driver of the greenback and consequently the EUR/USD. “As a result it did not really come as a surprise that EUR/USD shrugged off the very disappointing Phily Fed index (which fell from -5.8 to -12.5 points, while consensus had expected a result of +1.0 points). Economic data is of secondary importance if the Fed has to answer the question whether further bond purchases make sense from a cost-benefit point of view”, wrote Lutz Karpowitz, adding that despite better recovery than in Europe, the Fed has been disappointed with the pace of recovery. “The question now is less whether the Fed will be satisfied after all but whether it will reduce its QE3 measures despite – in its own eyes – unsatisfactory economic recovery”, Karpowitz said.

About Europe, a new refi rate cut is still possible: “In this context the ECB projections are clearly very significant and as a result obviously also the current economic data”, he continued, adding that contrary to the US the ECB’s future approach therefore depends mainly on the economic data.

American equity markets open positively Friday

The US Stock market experienced a much more positive opening Friday, after yesterday’s pullback that gripped all indices in negative territory. Beginning with the indices and composites, the NASDAQ rose +0.59% as it settles in region of 3150.90, up +18.40 points in these moments. In addition, the S&P 500 is trading in positive territory, operating at 1510.55, ascending +8.12 points or +0.54% at the time of writing. Finally, the Dow Jones has moved high at the opening as well, trading in the zone of 13942.72, presently +0.45% after a movement of +62.13 points.
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Session Recap: Dollar strong, EUR/USD weighed by LTRO payments

The US dollar trades broadly higher on Friday, while the euro came under renewed pressure after the repayment figures of the second 3-year LTRO were lower than expected, offsetting at the same time the better-than-expected readings from the German IFO series. Meanwhile the CAD is among the worst performers, with USD/CAD at 7-month highs in the wake of disappointing economic data. Stocks opened positively after 2 days of losses.
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