The total number of economic events was declining every day throughout the period ended Jan 26. Despite that, currency markets were kept in volatile mode due to other factors. They included continuous instability in global equity markets, even though we have seen some improvement of the situation after the ECB and the PBOC said they will provide more support. Additionally, oil prices are still hovering near $30 a barrel. The latter fact, however, failed to derail commodity-linked crosses including the Canadian Dollar. Joined by the Aussie and Kiwi, they managed to become the best performers during the previous week and gains were held above one percent.
Wednesday of the previous is clearly showing that Canadian events used to have great deal influence on the domestic currency. Indeed, the Bank of Canada’s moderately-surprising decision created the most visible part of daily action. As we have mentioned before, the number of daily events had been falling every day and this fact was reflected in volatility of both the Canadian Dollar and the market. Tranquil Monday and Tuesday affected the overall weekly readings for elevated volatility, which stood at only 36% and 33% for CAD and market, respectively. Compared to our previous report on this currency, there has been a clear slump from 70-80% seen two weeks ago.
Significance of the Canadian currency exceeded all possible short and long-term average indicators last week, helped by mainly unanimous and united market reactions of various CAD crosses to fundamental events from Canada and abroad. As seen from the mean correlation coefficient table, the average correlation between currency pairs stood at 0.58 points, well above the 20-day average of 0.51 and annual mean of just 0.43 points. With EUR/CAD the most correlated currency pairs normally include US Dollar, Japanese Yen and Swiss Franc due to the safe haven status of these currencies and the Euro.
After a plunge amid more favorable data from the US and anticipation of further action by the European Central Bank on January 22 and some wobbly movements on the following Friday, the EUR Index rushed through the new week on an uptrend, ultimately becoming one of the best performer of the period. The single currency posted modest weekly loses against the pound, the Canadian dollar and the krona, whose indexes held in the appreciation area throughout the whole period, but managed outperform notably the Pacific currencies and the Swiss franc.
In spite of the fact that the period was rich with influential economic events, the market volatility during the period was mostly below the historical level and slightly exceeded it only in 15% of time. However, on Thursday, at the end of the observed period the Euro’s volatility skyrocketed significantly almost above the historical level. Such a strong reaction started after the Federal Reserve decided to keep interest rates unchanged between 0.25% and 0.50%, following the first rate hike from the record low in a decade.
The period was marked by an increase in the average values of all observed correlation pairs. The most noticeable strengthening was observed in the bonds between EUR/USD and the EUR/JPY as well as EUR/CHF. Changes of the average EUR/USD correlations with EUR/AUD, EUR/CAD and EUR/NZD, in turn, were minimal, even though the dynamics of the component was rather animate. It held at the level of 0.35, but during the weekend and at the Wednesday’s evening, sharp falls of the component were noted , bringing it as low as 0.20 and notably skewing the average.
The past week was full of ups and downs, but the market managed to retain its previous leaders and losers. Thus for the second week in a row the Canadian dollar became the best performer of the period, whereas the yen ended the week with a strong decrease. The BoJ’s decision to introduce a negative interest rate surprised the market, and the yen fell sharply, losing 2.4%. The commodity currencies started the period with a downward trend, but the recovering of the oil prices on Tuesday became the turning point for the Loonie and the Aussie – their indexes changed direction and finished the observed week with 1.4% and 1.0% gains, respectively.
The past week was the first one this year during which the market’s elevated volatility portion did not exceed the 50% mark, moreover, it could hardly pass the 20% level. It means that the market calmed down and there were very few events to notably affect the observed currencies. The pound and the yen became the absolute leaders in terms of turbulence, as the former posted 43% portion of elevated volatility, but the volatility measure of the latter reached the 6.0 points mark against the background of BoJ decision to put the benchmark interest rate below zero. Undoubtedly, it became the most resonant event of the trading week as both the USD and DC volatility indexes reached their 2.3 points highs, but the USD/JPY component surged above the 10.0 level.
The dollars correlation composite held firmly below the significance threshold for the fourth week in a row. The measure remained heavily influenced by the commodity currencies, whose pairs’ continued to inject negativity into the associated components. Thus, the USD/EUR correlation with USD/AUD, USD/CAD, and USD/NZD edged further down, bringing their averages closer to significant levels and signaling a well-defined opposing behavior. Meanwhile, the pair’s bonds with USD/SEK and USD/CHF lost around 0.1 points, also contributing to the composite’s weakness.
Without a doubt the Japanese Yen was the worst performing currency of the period ended February 2. The Bank of Japan’s interest rate decision was quite unexpected for many market participants, while nobody had anticipated anything even similar to negative rates. BOJ Governor Kuroda had assured markets in Davos that the move was unlikely, but policymakers voted 5-4 in favour of cutting the rate from +0.10% to –0.10%. Bank of Japan is intended to combat declining inflation expectations and sluggish economic growth in the country. Following the decision, the Yen has immediately slumped 2%.
Volatility readings for the Yen are clearly reflecting everything that took place in the world’s third largest economy on Friday of the previous week. The Bank of Japan lowered the deposit rate, meaning now the commercial banks have to pay the central bank for parking cash there. The decision was followed by the Yen’s turbulence indicator spiking as high as 6.11 points, the levels we have not observed for quite some time in recent past. On the other hand, the reaction used to be short-lived, as market focus moved on to the ECB and even Fed, which is now not considered to hike rates in March. On top of that, Japan released no important fundamentals throughout other days of the period.
Different currency pairs of the observed Japanese currency correlated pretty well in course of the whole time period ended Tuesday of the first week of February. This fact is confirmed by the mean correlation coefficient, which used to hold at 0.60 points, down slightly from 0.63 points on the basis of the previous four working weeks. However, last period’s gauge has substantially overshot the 6-month and yearly averages of 0.45-0.41 points. All crosses posted higher correlations with EUR/JPY than it was usually in the past. With Euro and Swiss Franc being quite interconnected to each other, it resulted in the mean correlation coefficient of 0.81 for EUR/JPY & EUR/CHF last week, the best reading of the period compared to other JPY components.
The period, which put most of the observed indexes either on or above the baseline, resulted in a 0.6% gain for the EUR Index, making it the week’s second best performer. The only peer to advance above the Euro’s measure was the New Zealand dollar gauge, which was spurred by the unemployment figures which managed to came in much better than expected, rebound in oil prices and also, due to the central bank attempts to delay expectations of the further easing. On the other side of the baseline, the Greenback became the main looser and posted a 2.04% weekly plunge, greatly affected by the weak data on factory orders for December which dropped the most in a year.
In a terms of the elevated volatility, the market and the Euro were much more volatile compared to the previous week tendency. Thus, the portions of elevated volatility of the aggregate and EUR were 32% and 27%, respectively. For the most of the components the observed period was quite turbulent. The major gainers were EUR/CHF, EUR/JPY and EUR/SEK. The highest peaks of the market and EUR volatility indexes even managed to reach 2 points. Among the components, EUR/USD, EUR/CHF and EUR/SEK managed to overcome the 2-point level. Meanwhile, the most outstanding jump was demonstrated by EUR/JPY, which skyrocketed above the 11-point level.
The period was marked by an increase in the average values of all observed correlation pairs. The less noticeable strengthening was observed in the bonds between EUR/USD and the Asia-Pacific currencies. Changes of the average EUR/USD correlations with EUR/JPY were minimal, even though the dynamics of the component was rather animate. It held at the level of 0.51, as the Yen was on the back foot after the Bank of Japan unexpectedly decided to cut its benchmark rate into the negative territory.
The observed currency indexes posted another wide range of weekly changes, with some of the measures turning tables on their previous results. The most notable change of mind was showed by the yen’s gauge, which was pushed 2.5% below the baseline by the BoJ decision to introduce a negative interest rate on January 29. Then the index became the period’s worst performer, but in the past week it managed to pare some of the losses, posting a 2% growth over the base value. Similarly, the previous week’s second worst, the CHF Index, became the second best. The Euro’s gauge, in turn, remained on the third position. Meanwhile, the previous winners, the Loonie’s and the Aussie’s measures, lost the momentum and fell into the bottom-3.
Against the background of the rather turbulent second half of January, the Volatility Indexes showed quite weak activity in the past period. In terms of elevated volatility, the British pound became the most changeable currency among its peers, spending about 31% of the time above the historical level. The most tranquil, in turn, was the yen with only 11% of elevated volatility. Thus the portion of elevated volatility of the market was 20%. The Greenback held above the 1-point line for a quarter of the period and had the second highest volatility peak, losing only to Loonie, which managed to surge to 2.38 mark.
The first week of February brought some improvement to correlations of the USD pairs. The average of the Greenback’s composite gained 0.2 points and came closer to the long-term value. However, it did not mean that the picture changed significantly, as the commodity currencies coupled with the yen continued to hold on leading positions. The US dollar’s composite with its European counterparts stayed behind while the pound was the only one which could compete with the pacific peers. The currency strongly reacted to the manufacturing PMI and the interest rate releases, which made its significance measure hold around the 0.5 level.
Summary
[ul]
[li]The global economy entered into 2016 on a wobbly footing, with China sending jitters around the world. China’s economy in 2015 grew 6.9%, the slowest pace in 25 years. The world’s second biggest economy saw a difficult start to the current year, which included financial markets closure on two occasions as steep declines of more than 7% triggered market circuit breakers and a halt to trading. These developments had a devastating impact on business and consumer sentiment in January.
[/li][li]It came as no surprise that the Asia-Pacific region experienced massive declines in both short and long term sentiment indexes, with the three-year gauge plummeting to the lowest level since records began in November 2011. Given the weight the Chinese economy has on the global economic arena, future development in the world’s second biggest economy will continue to determine central banks’ monetary policy decisions, and effect market participants’ risk appetite, business and consumer confidence.
[/li][li]Europe, in contrast, was a bright spot in Dukascopy Bank January report, as both readings climbed in the measured month.
[/li][li]North America saw mixed results in January, as the six-month sentiment index inched down slightly, while the three-year measure rebounded.
[/li][/ul]
The Pound’s fate was determined by the events surrounding the Bank of England on Thursday of the previous week. By turning increasingly dovish on interest rates, the BOE sent the national currency deeper into red and on Thursday-Friday it was the second-worst performing component across the board, just behind the US Dollar. Concerns over the Fed rate increases, namely the possibility of no hikes throughout 2016, pushed the Greenback down by 2.17% over the whole period, the most negative result among G9 currencies. Australian Dollar got the second place from the end, by losing 1.73% in five days through Tuesday.
Markets were increasingly turbulent over the whole five-day period, and there were separate reasons for literally every single day. The period’s first part was especially busy with many statistical data releases from G8 countries. Economists were waiting for US employment and wage numbers to conclude the previous calendar week, in order to access the level of pressure on the country’s labour market from global instability that has been in place since the first weeks of 2016. However, volatile time slots were equally being changed by a more tranquil development. Therefore, elevated volatility indicator has only reached 36% for the Sterling and 35% for the whole market.
Significance of the British currency for the previous trading week has broadly come in line with longer-term average readings. Average correlations held at 0.42 points, the same as a 20-day mean and slightly above 0.37 points posted by half-year and annual time frames. Traditionally, some correlations were weaker than others from time to time. However, they were helped by a number of components with absolutely green correlations. A good example is the interconnection between GBP/EUR and GBP/JPY (0.82 points), which truly mirrored everything that took place on the markets in the past 30 calendar days.
For the majority of the observed indexes, the movement directions for the entire period was set on its very first day. As the market was heavily influenced by the falling oil prices, the commodity currencies’ gauges mostly followed a downtrend pattern, while the yen continued its rapid appreciation that started in the first days of February, after the currency was hit by the surprising BoJ interest rate decision. As a result, the yen added 4% in value during the period and gained 2% over its nearest counterpart – the franc, another safe-haven currency. Meanwhile, the Euro took the third gainer’s position with a 0.7% appreciation of its index. The rest of the observed currencies finished the period below the baseline.
The periods of elevated volatility broadened compared to the previous readings, mostly due to a more even distribution of activity across trading days. The market and the Euro both added 10% to their overturbulence portions, while most of the hustle came from the yen, which was climbing up throughout the week, but suffered some ups and downs in Tuesday and Wednesday Asian sessions, putting its measure at 54.1%. The JPY Volatility Index was also the one to reach the period’s second highest peak, jumping to 3.2 as the yen zigzagged with the wave of demand for the safe-haven currencies on Thursday. The period’s high, in turn, was posted by the krona’s gauge, which spiked to 4.8 with the Riksbank’s decision to put rates deeper into the negative territory.
The past week was marked by the weakening of the single currency’s significance. The average value of the EUR significance measure has lost 0.07 points comparing with previous three periods. The EUR/USD components also showed the weakening of bonds and lost from 0.02 to 0.16 points. The only EUR/USD components to not lose any points were the ones with EUR/JPY and EUR/CAD. Comparing with the long-term values, the average values of the composite and almost all EUR/USD components also suffered a 0.03-0.18 points decline.
For the second week in a row the yen confidently maintained the leading position, ending the period well ahead of its peers. The yen’s strengthening started at the very beginning of February as a recovery from a plunge following the BoJ unexpected interest rate cut. This time the JPY Index was further supported by an upsurge of interest towards safe-haven currency, and posted a solid 2.6% increase. The franc and the Euro followed their safe-haven peer, but at a much more moderate pace and finished the period notably closer to the baseline. For other observed currencies the period was not successful, and they ended the week at the negative area.
After two relatively tranquil weeks, when the volatility indexes peeked above the reference line on only three out of five trading days, activity on the market picked up. Though occurring mostly in late afternoon and thus still deviating from the usual pattern of increased turbulence all throughout the European and North American sessions, higher-than-historical volatility values made up around 50% of observations for the major currencies, peaking at 63% for the yen. The most tranquil currencies were the Loonie and the Kiwi, both posting the readings of 37%, which were still more than 15% higher than previous. Maxima-wise, the most notable result was shown by the Swedish krona, whose turbulence measure jumped to 4.9 with the Riksbank’s decision to put rates deeper into the negative territory.
The average of the dollar’s correlation composite was unchanged from the previous week’s somewhat recovered readings, but the bonds between the pairs containing the safe-haven and the commodity currencies turned back to posting strongly negative values. Correlation between USD/EUR and USD/CHF, on the other hand, notably strengthened, adding 0.09 points to the average and pushing the distribution tightly to the upper limit. All in all, after spiking on Friday, February 5, the dollar’s composite spent the first part of the week among its averagely performing counterparts, but, as the pull of the turmoil between the safe-haven and the commodity currencies bought it back below the significance level, it returned to being the weakest of the observed gauges.
Last time when we discussed the Japanese currency, it used to be the worst performer across the board amid a decision of the Bank of Japan to introduce a negative interest rate. However, the Yen’s bearish reaction was very short-lived and it resumed rallying in a few days post-decision. This is all about the safe haven status of this currency, which is attractive in times of increased instability in global equity and commodity markets. The vast part of indexes, even including the Euro and Swiss Franc, traded in the negative zone during last period ended February 16, while the researched currency earned the first place.
Japanese events were not those that dominated in the economic calendar during the researched time period. However, volatility of the Yen was still higher than two weeks ago when the Bank of Japan made its rate decision. JPY remained volatile for 44% of all time in the past five trading days, while the market’s elevated volatility touched only the 35% mark. The only cross to trade in a turbulent manner more than 50% of all time was SEK/JPY. On Thursday the central bank of Sweden, Riksbank, curbed the Repo rate to –0.50% from the previous level of –0.35%, thus creating a great deal of turbulence for the whole market.
Although weakening by the end of the period, significance of the Yen was high overall, helped by especially confident gains on Wednesday-Friday. Looking at violins, only the JPY/EUR’s component with the JPY/USD pair, the most liquid one, was shortly moving into the red territory, even though general picture still looked quite positive. The mean correlation coefficient skyrocketed to 0.73 points, therefore surpassing all previous periodical averages. At the moment the 20-day mean is 0.65 points and it drops to only 0.42 on a yearly basis.
The EUR Index lost the momentum it accumulated during the last days of the previous period, making its movement less directed and thus less successful. Among more determined indexes, the Lonnie’s and Aussie’s measure retained the uptrend it took up on February 12 and strengthened due to rising oil prices on the back of the Doha commitment, being commodity currencies. However, Australia’s labor market took a turn for the worse in January as a large number of full-time jobs were lost and the unemployment rate rose to its highest level n five months.
During the period, the market volatility was below the average historical level. While the Euro volatility index’s values were very close to those of the market, the pound became the most turbulent currency. Its index spent 29% of time in the area of elevated volatility and reached the 1.42 mark on Tuesday evening, following the release of disappointing CPI data from the UK and continued market uncertainty. Despite accelerating at its fastest pace since January 2015, the poor form of UK inflation continued as the latest UK CPI showed minimal 0.3% growth year-on-year, far below the 2% inflation target set by the Bank of England.
The Euro’s significance measure held at its usual level throughout the past period. Thus compared with the short-term values, averages of the aggregate and its components changed for 0.01-0.47 points. Most of the components started the period at a rather high level, but declined in the middle of the week. The drop was most notable in the components containing EUR/JPY, especially in correlations with EUR/CHF and EUR/SEK, which fell into the negative area on Thursday. Most correlation distributions, in turn, shortened their lower tails and concentrated around the averages.
The past week was full of ups and downs, with the observed indexes switching positions throughout the whole period. The yen’s gauge posted the greatest weekly growth for the third time in a row, though its ascent was notably less firm, and it spent the first day and a half below the baseline, hit by the preliminary Japanese GDP showing a greater-than-expected decline in Q4. The yen’s main competitors were the Loonie’s and Aussie’s measures, both of which surged with the oil prices on Wednesday and finished the week with a 0.8% gain. The period’s biggest loss, in turn, was posted by the pound’s index. The measure finished the week with an uptick, supported by the news of an agreement reached by the UK Prime Minister and the EU leaders at the summit in Brussels, and outpacing its closest peers—the Euro’s and the franc’s gauges. However, all gains were erased as the new week opened after London Mayor expressed his support for “Brexit”, and the GBP Index lost 1.1 points from the Friday’s value.
The past trading week was relatively calm for the Greenback and its counterparts. The pound became the most turbulent currency in terms of elevated volatility portion as it notably reacted to domestic news such as CPI and unemployment releases. However, the portion reached only 20%, while the market volatility exceeded its historical level only in 7% of time. The safe-haven yen, in turn, turned out to be the most tranquil against the background of turbulent first half of February and the USD/JPY volatility index posted 3% of overturbulence instead of 63% previous week.
For the third week in a row the Greenback’s significance measure held roughly at the same level. Comparing with the previous period average of the composite lost only 0.03 points. Growth of the commodity currencies’ rates was reflected in rise of average values of correlations with USD/AUD and USD/CAD. In contrast, the bond between USD/EUR and USD/GBP weakened and the component lost 0.13 points.
The past period was rather dynamic for the observed currencies, and the indexes posted a wide range of weekly changes. The highest mark was hit by the yen’s gauge, which continued to undermine the BoJ hopes for an upturn in inflation and gained over 2% over the past five trading days, bringing its monthly growth above the 4% mark. Rivalling the Asian index were its commodity peers, guided by the oil prices and the recently sharpened divergence between the risky and safe-haven assets. Meanwhile, the Euro’s and the franc’s gauges were dominating on the other side of the baseline and posted the second and the third worst results, respectively. The latter, however, managed to gain back around 1% of its base value after the SNB head’s speech fuelled the demand for the currency on Tuesday, ending up with a modest weekly loss of 0.5%.
The past week was extremely tranquil for almost all observed currencies. Thus elevated volatility portion of the market and currencies remained in 2%-14% range. The only exception was the British pound, which 30% of the observed period spent above the average historical turbulence level. However the peaks of the pound’s volatility were not high. The Aussie and the Swedish krona, in turn, showed the most conspicuous spikes. The Australian employment data and the Swedish CPI reports pushed the indexes up, and they even exceeded the 2-points level.
The pound’s significance measure was holding among the leaders during the observed period. As concerns about the possibility of “Brexit” came to the forefront with the Brussels summit, the bond between the pound’s crosses notably strengthened and the correlation distributions shifted towards strong positive values. However, the pound was not an indisputable leader as the commodity currencies and the yen remained among the main market drivers, and the oil market movements continued to be one of the major economic issues.
The first day of the period was calm for all observed currencies. The most conspicuous was the Sterling drop – which*reached its lowest level in seven years as investors anticipate the possibility of Britons voting “Out” in the upcoming ‘Brexit’ referendum. Thus, the currency remained on the worst performer’s position till the end of the week, and probably, will continue its downward trend. Together with the majority of the currency indexes, it ended the period with 3.0% deviation from the baseline. Commodity currencies such as Loonie, Aussie and Kiwi, in turn, finished the period with more than 1.3% gain and became the top performers.
The turbulence on the market edged up from 1% of elevated volatility in the period ending on February 24, mostly fueled by negotiations over crude oil and increased concerns over a possible Britain’s exit from the Euro zone. The Euro was the sixth most turbulent currency by all parameters, with its portion of elevated volatility and average volatility index level beat by the pound’s and the yen’s readings, and the maximum turbulence surpassed by the franc and the dollar. Subsequently, EUR/CHF was the most volatile single currency’s cross. Meanwhile, Friday, Tuesday, and Wednesday were the only days with some noteworthy volatility spikes and all of them were about the Euro’s turbulence.
The Euro significance measure was quite dynamic during the period, ranging from 0.17 to 0.46, but ultimately posted slight change from its initial value. The composite’s average value remained unchanged from the previous period, though the averages of most of its EUR/USD components posted a moderate growth. This growth was more substantial than the weekly change, as the component distributions notably shifted up, making their upper tails heavier and lower tails shorter.
The past week was marked by the rapid growth of the Canadian dollar, which started on Wednesday against the background of the rising oil prices. As a result, the CAD Index ended the period with an almost 3% gain and became the indisputable leader of the week. The pound, in turn, was the main outsider of the observed period. Its weakening began after the announcement of the date for the “Brexit” referendum last week, and the pound’s measure lost 2.58%. The second worst performer of the week was the Euro, whose index dropped below the baseline with the disappointing PMI data in the very beginning of the period and consequently spent its second week in a row in the negative area.
In terms of volatility, the past week turned out to be very similar to the previous one. There were very few economic releases which notably influenced the market activity, but during the rest of the period the currencies were largely driven by the oil price movements and the “Brexit” fears. As a result, the British pound became the absolute leader in terms of elevated volatility portion with a 33% reading. The Greenback, in turn, was the calmest among its counterparts.
The dollar’s correlation composite slid a little further below the significance threshold in the last week of February, failing to return to the strengthened levels it reached in the beginning of the month. Most of the USD/EUR components held close to zero, with only USD/CHF gauge posting a solid average 0.80. Meanwhile, correlations between the pairs containing the safe-have and commodity currencies became more negative compared to the previous week, notably weighting the composite down on Friday despite the dollar’s strong move up. Among other observed composites, the Euro’s gauge held on the same levels as the dollar’s, while dominating their peers were the Asia-Pacific measures.
Canadian Dollar represented the example of a very reliable price growth in course of the past period, even though the country’s fundamental calendar brought us nothing but the Tuesday’s GDP report. Here we have got a classical influence of commodity prices on currencies that depend on oil and other energy developments. Both CAD and NZD were booking the largest increases on Wednesday-Friday of the previous week. In the meantime, the busy economic week for Britain failed to move the Pound, which seems to be entering the wait-and-see mode before the upcoming referendum on the UK’s membership in the EU on June 23.
The Pound was definitely much more volatile in course of the observed time period than the market as a whole. A particularly turbulent cross was the most popular one—the Cable. GBP/USD was active in 37% of all time of the period, according to the elevated volatility indicator’s data. Some important economic events caused movement of the Greenback, including a decent durable goods report on Thursday and the second-estimate Q4 GDP release a day later. US economy posted a 1% economic expansion amid a buildup in inventories. Investors, however, had anticipated a slowdown to only a 0.4% increase.
Significance of the researched currency was a subject to decline on a day-to-day basis over the period we are looking at—from Wednesday of the previous week until this Tuesday. Nonetheless, mean correlations of all crosses of the Pound have received a reading of 0.50 points, which is more than 0.48 points for the 20-day period before the observed week and 0.38 points on the annual basis. Traditionally, low correlations were booked by those components that include commodity-dependent currencies on the one side and safe-havens, such as the Euro, on the other.
[B]Dukascopy Community TV Webinars as of 4 March, 2016[/B]
Dear traders,
As always, we would like to welcome you to tune in to our daily webinars that are held on Telefision, Dukascopy broadcasting platform, where Dukascopy Community members share their trading strategies/ideas and discuss live trades on air starting from 7:00 GMT up until 18:00 GMT.
Today’s agenda:
08:30 - Catching Every Pip
11:00 - Market Analysis Live in 3 Different Time Frames
12:00 - [B]DUKASCOPY RESEARCH WEBINAR[/B]
12:30 - Current Week in Focus
13:00 - Algo war, tech talk and everything you wanted to know about the market but were afraid to ask
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15:30 - Reviewing the impact of news and events on the FX market
16:00 - Daily Technical Levels
Make sure you tune in and stay with us, as we are going to discuss the USA Non-farm Employment Change numbers, which will be out at 13:30 PM GMT! Moreover, today is THE DAY FRIDAY(!), therefore, take a look at the topics we are going to cover at out today’s Research Webinar at 12:00 GMT:
Fun Friday Quiz on Top News and Headlines
Expert Commentary From ING Belgium SA/N on Euro zone
The EUR Index continued to go south during the fourth day of spring, finishing on the position of first worst after a particularly sharp fall on Wednesday. The another index post looses was the Swedish krona measure, which held on a steady downtrend Tuesday and took its conclusive slump on Wednesday. On the other side of the baseline, the Australian dollar remained the leader after the he Australian economy grew 0.6% last quarter, beating the market forecast of a 0.4% expansion. The Sterling and the Loonie came in the second and the third, mainly supported by macro data as well as oil prices.
The past five trading days, much like the several previous periods, were quite volatile for the observed currencies. The most volatile were CHF and NZD composites, with 40% and 20% portion of elevated volatility. The first strongly reacted to better-than-expected Swiss Q4 GDP, pushing the market volatility to exceed the average historical level on Wednesday. The kiwi index, in turn, also reached the great volatility peak among its counterparts. The currency secured the position of the best performing currency out of the G10 basket during Friday’s overnight session, finding support primarily from a commodities surge and softer dollar.
Even though the Euro significance measure was decreasing during the period, its average correlation readings stayed almost at the same level. The value of the composite itself edged 0.09 points up, while its most resultant components – EUR/USD correlations with EUR/JPY and EUR/CHF, – gained 0.25 and 0.32 points on their averages. The bond between EUR/USD and EUR/SEK was the only one to weaken, with its mean value losing 0.03 points. It did, however, grow compared to the long-term readings, as did all other correlation components.
The past period was notable for a clear separation of the observed indexes into leaders and losers, and their persistence in the chosen direction. Thus, the Pacific gauges strengthened their positions above the baseline, both entering a rally on Wednesday. The Aussie’s measure got an additional push from better-than-expected GDP released earlier the same day, and with that held about one point above its Kiwi counterpart, posting the period’s greatest gain. The second best result was shown by the NZD Index, while the closing gauge among the top three performers was the pound’s measure, which spent the week climbing out of the pit it fell into with the “Brexit” concerns and managed to win back around 1% of the 2.6% it lost in the past period.
Volatility on the market picked up compared to the previous two tranquil periods, though it remained borderline subdued, with maximal overturbulence portion of 23% and average index values around 0.8 points. Nevertheless, there were three currencies that drove their volatility measures above the 2 points line. The franc’s index was the first and reached the 2.22 mark in Monday afternoon. On Wednesday, the Aussie positively reacted to the higher-than-expected domestic GDP and its volatility measure skyrocketed to the week’s high of 2.84 points. The week ended with one more notable spike of 2.39 points experienced by the dollar’s gauge, which followed widening trade deficit and pessimistic wage data releases.
The Greenback’s significance measure rose slightly in the past week, ending the period with a 0.13 points gain. However, the average value of the composite did not exceed the feeble monthly and weekly values. Moreover, averages of USD/EUR components containing European currencies lost 0.01- 0.18 points from their previous values. Other USD/EUR components, in turn, showed positive dynamics and shifted up, exceeding their short-term average values.
