EURUSD continues to find itself under pressure this week, although few would have guessed that the concern on this occasion would be surrounding Germany. After sitting through the long and painful Greece saga, wholesale political overhauls in Italy and Spain, and nervous rumours surrounding France’s banking system, investors have clung to Germany as the lone beacon of hope in an otherwise flailing Eurozone. However, the pitiable German debt auction yesterday has changed all that. The bid to cover ratio (a measure of demand for the debt) for the fresh offering of 10-year bunds was a measly 1.1, making it the worst bund auction in history.
Understandably, there has been a continued sell-off in bonds from other European nations in the aftermath, and declines seen European equity markets yesterday suggest that the liquidation of Eurozone assets is becoming more widespread. Overnight, the Asian major indices have managed to fare a little better, with the Hang Seng +0.4% and Shanghai Composite +0.1%. After spending yesterday closed for the Japanese public holiday, the Nikkei has traded down -1.8% - no doubt catching up with the losses seen in other Asian bourses during yesterday’s trade.
Early in this morning’s European session we have seen German Q3 GDP come out in line with expectations at 2.5% YoY, but there is still some anxiety that the upcoming IFO surveys may disappoint and reignite EUR selling. The only other data release of interest is UK Q3 GDP which is expected to stay at 0.5% QoQ, 0.5% YoY. Due to the Thanksgiving holiday in the US, the afternoon is likely to be characterized by thin liquidity and low participation in the FX markets.
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Understandably, there has been a continued sell-off in bonds from other European nations in the aftermath, and declines seen European equity markets yesterday suggest that the liquidation of Eurozone assets is becoming more widespread. Overnight, the Asian major indices have managed to fare a little better, with the Hang Seng +0.4% and Shanghai Composite +0.1%. After spending yesterday closed for the Japanese public holiday, the Nikkei has traded down -1.8% - no doubt catching up with the losses seen in other Asian bourses during yesterday’s trade.
Early in this morning’s European session we have seen German Q3 GDP come out in line with expectations at 2.5% YoY, but there is still some anxiety that the upcoming IFO surveys may disappoint and reignite EUR selling. The only other data release of interest is UK Q3 GDP which is expected to stay at 0.5% QoQ, 0.5% YoY. Due to the Thanksgiving holiday in the US, the afternoon is likely to be characterized by thin liquidity and low participation in the FX markets.
By
M.Zohaib Gadit
Forex Trading Consultant
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