Following a week where a global movement toward risk-aversion helped the dollar push the euro lower, the continental currency plummeted to its lowest valley since the 2nd week of July 2010, the euro was further propelled by the incidental comments of an ECB official that were published by the media fueling liquidity issues in the markets on the idea that the global economy is faltering. Axel Weber, an ECB council member, was quoted in a Bloomberg article as saying that it would be prudent for the ECB to continue to extend unlimited liquidity to European banks past this year.
Because of this growing sentiment, the greenback should be ready to keep gaining on the euro next week as the belief that the world’s economy is stalling should augment the dollars’ safe-haven appeal to investors. There is a prevailing current fear in the bonds market that a second recessionary fall (also known as a double-dip recession) could be approaching, and with the end of the summer approaching, and markets anxiously awaiting the US growth data next week, most investors will not be looking to hold an investment that is betting against it. “Essentially, the market movement is all in one direction,” said Dan Cook, Senior Market Analyst with IG Markets’ US affiliate in Chicago. “There is a growing phenomena being seen in the market that a US slowdown somehow becomes a dollar- positive move and this may affect the overall recovery process for the globe.
Traders, experienced and otherwise, who look for current EUR/USD macro-econ news will find this type of information crucial to their decision making process. Several FX websites post daily FX commentary. If you are new to trading, looking for seasoned FX commentary, or even considering opening an account, you can learn about the mechanics of Forex trading by attending a free trading webinar at http://www.igmarkets.com/fx/seminars.html.
These products are not suitable for everyone, so please ensure that you fully understand the risks involved. These products are volatile instruments that involve a high risk of losing all of your investment. Past performance is not always indicative of future results