Dukascopy Research Thread

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The equally-weighted indices of the Swiss Franc and the Euro continue to share similarities, a tendency that is expected to hold given the current conditions, namely a 1.20 cap for EUR/CHF. However, the end values differed quite substantially, though both were indexed to 100—the Franc appreciated 0.5%, but the single European currency finished the five-day period at the level it was on Sep 20. A day-by-day analysis reveals, this was only due to the events on Monday, the rest of the time these currencies behaved perfectly the same, rising and falling together.

One of the reasons for such a notable deviation in the link between the Franc and the Euro from the norm most likely lies in the fact that the SNB Chairman speech was scheduled on the first day of this week. And even though the commentaries of Thomas Jordan did not prove to be significant in the end, the usual rhetoric was simply reiterated, it does not deny that his words may have a powerful impact on the value of the currencies. On the contrary, now there is even more evidence that such events are closely watched by the markets and leave their trace on the exchange rates even if the potential does not get to be fully realised.

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The current context for the common currency appears to be ambiguous, as its equally-weighted index did not follow a particular tendency throughout the last five trading days, but was oscillating around the base level. At first the Euro-bulls were discouraged by weak Eurozone manufacturing and German economic climate data, leading to a 0.5% depreciation. However, the situation started to improve when German consumers, unlike businesses, turned out to be more confident than a month ago.

The major currencies the Euro managed to outperform last week were SEK (+1%), NZD (+0.6%) and AUD (+0.5%). The first one was mainly weighed upon by disappointing Swedish consumer confidence published on Sep 25, then the Krone on average across the markets lost 0.7% of its worth. The second one suffered from widening trade deficit in New Zealand.

In the meantime, the only tendency that proves to be the most stable in the crosses of the Euro is outperformance of the Japanese Yen, which has already went up by 1.8% with respect to the single currency against the background of increasing worries over the Italian political situation and the U.S. debt limit issue, since both factors contribute immensely into the risk-aversion.

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For the period Sep 25 - Oct 1 the U.S. Dollar was the second most bearish currency after its Northern counterpart, which depreciated by 0.7%, but lost only 0.4%, although there are two impending issues that remain unresolved, namely the government shutdown and looming debt ceiling that may damage the current recovery of the world’s largest economy. Last week the currency’s index largely stayed unchanged, showing no visible reaction to the releases of goods orders, home sales, GDP growth rate and even unemployment claims.

After the weekend, however, the fluctuations of the index became wider and at the same time with a significant skew to the downside due to the uncertainty and potential risks surrounding the mentioned topics. The emerging bearishness was specifically pronounced early Tuesday, when the currency gave up 0.7% of its value within the first six hours. Nevertheless, the dip was partially negated later in the day when the data on the U.S. manufacturing turned out to be more positive than expected, lifting some of the pressure off the Dollar.
Meanwhile, in the longer-term perspective of the last 20 days, the U.S. Dollar was the worst performing currency because of the postponed tapering, being currently 3.1% cheaper than a month ago.

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The data shown by the United Kingdom during the last five days were largely showing a positive tendency in the economy, although the pace of the improvement lagged behind the broad expectations, a fact that should have put some pressure on the price of the Sterling. Still, the British Pound was kept buoyant by the weakness of the U.S. Dollar, which dragged the loonie along, and by the softness in Australasian currencies, which failed to commence a robust rally in light of the uncertainty in the market, even though the signs that fundamentally the situation is improving are present.

The first three days of this week the fluctuations of the equally-weighted index of the Pound appeared to be wider than usually. However, it was Sep 27 and Oct 3 when the currency was moving the most. In the first case the Sterling joined a group of the safe haven currencies, namely JPY and CHF, and on average advanced 0.76% relative to its main counterparts.
The second case, on the other hand, was characterised by a precipitous fall of the Sterling’s value, which was associated with ubiquitous strengthening of the single European currency, a tendency that started after Draghi’s speech a day earlier, although the same words in his earlier discourse had completely the opposite effect.

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Last week the Euro was one of the most buoyant currencies in the market, as on average it managed to increase the value throughout the main crosses by 0.3%, while the British Pound and the Swiss Franc equally-weighted indices respectively declined 1.4% and 0.5%. The only currency that was able to outperform the Euro (by 1%) was the Australian Dollar, which strongly benefited from RBA’s reluctance to cut the rate coupled with the improving sentiment in the region. And even though Wednesday’s data negatively impacted the Aussie, the currency continued to recover afterwards.

In the meantime, the news flow that directly relates to the well-being of the Eurozone and therefore to the worth of the common currency was mixed. While the unemployment rate and retail sales surprised on the upside, inflation and producer prices did not meet the expectations of the market.
ECB’s press conference in the middle of the week seemed to be a turning point for the Euro, as Draghi’s constant reminder that the central bank stands ready to rescue the bloc, pushed the price of the currency upwards. However, the positive effect of the ECB’s commitment to help the recovery already appears to be wearing off, since on Friday the Euro lost some of its positions.

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On the whole the U.S. Dollar continues to decline at a gradual pace. Within the last 20 days it lost two percent and is the second most bearish currency after the Canadian Dollar, which in turn is 2.3% cheaper than a month ago. The main bearish factor during the past five days was the non-farm employment change that disappointed the market and made the Dollar slide 0.4% on Oct 2, whereas the better-than-expected unemployment claims failed to restore the confidence of investors and the equally-weighted index of the currency remained unchanged.

Somewhat surprisingly, but a scarcity of the news coming from the United States because of the government shutdown benefited the value of the Dollar. It has almost completely offset the negative effect of the uncertainty associated with the resolution of the budget and debt ceiling issues.
Some of the ambiguity regarding the world’s largest economy was reduced on Oct 8. Then it turned out that Janet Yellen, the current vice chairman, is likely to take Bernanke’s place in leading the Federal Reserve. However, she is a renown proponent of stimulative measures and her nomination should have had a downward pressure on the currency, but for now seems to be a Dollar-positive event.

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At first the value of the Japanese Yen grew on the back of positive economic data and unwillingness of the Bank of Japan to increase the stimulus. The Yen even withstood a strong blow from a contraction of the current account surplus late Monday and continued to stay above the starting point, maximally being 1.1% more expensive than at the very beginning of Oct 4. However, the FOMC meeting minutes, coupled with the announcement that Janet Yellen is to become the next Fed Chairman, substantially increased attractiveness of the U.S. Dollar and thereby introduced significant changes into the behaviour of the Yen, which declined as a result.

The most the Yen underperformed relative to the Aussie (1.5%) and Kiwi (1%), both of them rose despite the uncertainty in the market, and relative to the U.S. Dollar that does not turn off the bullish path and increases in worth amid a lack of economic reports, such as the non-farm payrolls. The only currency the Yen significantly outpaced was the Swedish Krona—the pressure on the currency due Riksbank’s dovish comments last Friday was exacerbated by a lower-than-expected rate of inflation and disappointing growth of industrial production.
Interestingly, the Yen reacted to the FOMC statement on Sep 18 in exactly the same way, namely with a prolonged dip, even though the effect on the U.S. Dollar was the opposite. Then the currency was closing notably lower for two consecutive days.

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Dear traders,

We have just entered the last quarter of this year, but we have already run into events that are sure to keep the investors on their toes for a prolonged period of time. Even if these questions, namely, the U.S. government shutdown and the upcoming deadline to raise the debt ceiling, are to be resolved in the nearest future, they are sure to leave a notable trace in the financial markets. This will again highlight the importance of the political factors, which have been increasingly significant as of late, and not only in North America, but throughout the world. And even though the foreign exchange market seems to be slow to react for now, as the volatility remains fairly low at the moment, the rising Treasury yields as a result of the increasing possibility of a default and the postponement of the QE3 tapering are already changing the way how the currencies behave.

In the meantime, Dukascopy Bank SA seeks to broaden the opportunity horizon for its clients and has already received a Securities Dealer License during the last quarter. It will allow us to extend the scope of financial instruments being offered through the contracts for difference and enable you to take advantage of the latest developments in the world economy.

As for this particular issue of the Quarterly Report, in addition to our traditional sections, we have also included a section which sums up the view of our FX Community members on the major tendencies in Forex; you may already know it as Community Forecasts. We would like to use this opportunity to express our gratitude for their participation and welcome all of you to take part in our periodic releases.

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Summary

• The six-month and three-year global economic expectations improved in September, a Dukascopy Bank SA poll showed. The six-month economic sentiment index advanced 0.06 to 0.59. The three-year economic outlook improved 0.02 to 0.67, after declining to 0.65 in August.
• Respondents became more optimistic about the six-month and three-year European economic outlooks in September. The six-month economic sentiment index advanced 0.08 to 0.49, the highest reading since records began in 2011. The three-year outlook climbed to 0.58.
• The North American economic outlooks also improved. The six-month and three-year indices climbed to 0.67 and 0.72, up from 0.66 and 0.71, accordingly.
• The Asia-Pacific six-month month and three-year economic expectations rose to 0.63 and 0.73, respectively.
  
  

Economic outlook (term structure)
Figure 3 presents the term structure of the Dukascopy Bank Sentiment Index (Y-axis) mapped against GDP growth forecasts made by poll respondents (X-axis). Overall, DBSI values and GDP growth forecasts match directionally, suggesting the global economy will perform better three years from now.
Respondents revised the European six-month and three-year economic growth forecasts to 0.47% and 1.33% in September, from -0.10% and 0.90% respectively in August.
Poll respondents suggest that the North American economy will expand an annualized 1.40% six months from now and 2.13 three years from now.
The Asia-Pacific economic growth projections are the most prominent. Experts forecast growth of 3.07% and 3.93% six months and three years from now respectively.


Economic development stages
Figure 4 presents the business cycle and its phases - expansion (real GDP is increasing), peak (real GDP stops increasing and begins decreasing), contraction or recession (real GDP is decreasing), and trough (real GDP stops decreasing and begins increasing).
Respondents are divided on the European six-month EDS. Thirteen claim the economy will be in a recession while fourteen say the economy will be expanding.
Experts support the view that the North American economy will be expanding both six months and three years from now.
Experts are united about the Asia-Pacific 3-year EDS – twenty six experts forecast expansion and three say the economy will reach its peak.


Six-month economic outlook
Figure 5 shows the six-month economic outlook for Europe, North America, and Asia-Pacific. The global six-month economic prospects ameliorated 0.06 to 0.59 in September.
The European six-month economic sentiment index advanced 0.08 to 0.49, the highest reading since records began in 2011. Six respondents (20%) are pessimistic about the economic outlook, eighteen (60%) say the outlook is “neutral” and the rest (20%) claim the outlook is “positive”.
The North America six-month economic prospects improved to 0.67 from 0.66 in August. Twenty two experts (73%) claim the outlook is “fairly” or “definitely” positive and five (17%) suggest the economic outlook is “neutral”.
The Asia-Pacific sentiment index rose to 0.63, up from 0.53 in August. Fourteen respondents (47%) are either “fairly” or “definitely” positive about the six-month economic outlook. Eleven (37%) say the outlook is “neutral”.

Economic outlook comparison
Figure 9 presents a discrepancy in views on the economic outlook among local and foreign experts. September poll results reveal that respondents from North America are less optimistic about the local economic outlook compared to their foreign colleagues.
Europe: Local experts are significantly more optimistic about the European six-month economic outlook compared to their foreign colleagues, with a discrepancy in views of 0.20. The discrepancy sheds to 0.11 for the three year economic outlook.
North America: Respondents from North America are less optimistic about the regional six-month and three-year economic growth prospects (0.55 vs. 0.73 and 0.58 vs. 0.79, respectively).
Asia-Pacific: Local respondents are less optimistic (0.58) about the Asia-Pacific six-month economic prospects compared to foreign experts (0.65). The discrepancy in views reverses to a positive 0.04 for the three-year economic outlook.

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Although there were no fundamental reasons for the Euro to gain value lately—most of the data were either in line with the expectations or surprised on the downside, the equally-weighted index of the single European currency still went up by 0.3% within the past week, closing lower only Wednesday and preserving the upward momentum throughout the rest of the days. The main contributor into the Euro’s success was its cross with the Japanese Yen that has advanced nearly 1.3% since Oct 7, mostly after the FOMC meeting minutes had been published (on average the Yen has lost 1.5% between Oct 9 and Oct 11).

Nevertheless, we would rather view weakness of the common currency’s main European counterparts as a reason for its bullishness, namely underperformance of the British Pound and the Swedish Krona, which made the Euro relatively attractive. The former currency suffered sizeable losses (-0.8%) after the U.K. manufacturing production posted a 1.2% decline in lieu of a modest gain. The latter currency plummeted 0.9% in a matter of few hours following the industrial production sector being reported to contract by a greater percentage (-6.9%) than initially expected (-5.2%). However, the Sterling (+5.5%) still remains more bullish than the Euro (+4.7%) in the perspective of the past six months.

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In the middle of the last week the U.S. Dollar received a substantial boost after the FOMC meeting minutes, which the market interpreted as committee’s desire to start tapering this year. Accordingly, this was a Dollar-positive event, amid which the currency on average appreciated 0.7% in the market, leaving most of its main counterparts (except for the Australasian currencies) far behind. The optimism and the respective increase in demand for the greenback was also provided by the news that Janet Yellen is to become the next Fed head.

However, the following trading days the U.S. Dollar performed poorly compared to its rivals, and the equally-weighted index erased nearly all of the previous gains. From the one side the sell-off was triggered by the looming uneasiness in the market associated with the inability of the U.S. politicians to make final decisions on the country’s budget and debt limit, which might even compromise the ability of the world’s largest economy to honour its obligations. From the other, the latest data, such as the initial jobless claims and consumer sentiment, surprised to the downside, meaning the Federal Reserve members will be pressured to reconsider their previous statement and postpone the start of reduction of monthly asset purchases, possibly until the next year.

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The first part of the observed period the Swiss Franc was inclined to depreciate. The equally-weighted index of the currency fell 0.8% from Oct 11 to Oct 16. However, it was not due to the Swiss producer prices that increased at a slower pace than initially anticipated. As a matter of fact, on average the Franc rallied 0.5% as a result of the only disappointing news that were directly linked to the Swiss economy. Next day the sell-off was ignited by the release of the ZEW economic sentiment. Even though the actual figure overshot the expectations, both the Euro and the Franc declined.

The Swiss Franc continued to behave contrary to the norm on Wednesday as well. Even though the Swiss ZEW economic expectations surprised to the upside, the value of the currency plunged 0.4%. However, most of the accumulated losses were erased on Thursday, resulting in only a 0.3% decline within the last five trading days. Accordingly, it is safe to assume that the Swiss Franc is currently not driven neither by the Eurozone nor by the Swiss news. Instead, the main variable in the equation that defines the value of the Franc appears to be the situation in the United States, being that the indices of these two currencies have been negatively correlating lately—any Dollar-positive event forced the investors to give up francs.

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With the only exception of the current account, the news published lately with respect to the Eurozone were largely positive. First, growth in the industrial production of the 17-nation union overshot expectations. Then the sentiment in the bloc’s main economy turned out to be better than estimated. Nevertheless, the equally-weighted index of the Euro continued to grind lower despite the bullish fundamentals and lost 0.5% of its value during the first three days of the previous week, being that the U.S. politicians came to an agreement regarding the budget and the national debt.

Meanwhile, each time the U.S. Dollar moved upwards, it caused similar in size dips in the single European currency. However, this relationship did not hold when the market participants sold off the greenback—it gave no significant boost to the Euro. A vivid example of this we observed on Thursday, when the U.S. Dollar index plunged more than 0.8% as a result of the common view that the beginning of tapering is likely to be delayed until the next year—otherwise the world’s largest economy will be unable to weather the negative effects that the shutdown entails. At the same time there was a minimal increase in the demand for the Euro. For the whole day the currency appreciated by merely 0.31% and stayed completely unchanged on Friday.

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The last five trading days were particularly interesting for the U.S. Dollar. Even though the budget deal has been finally reached last Wednesday, the market, instead of starting to price in the positive event and thereby lifting the pressure off the currency, started to calculate the damage caused by the temporary shutdown, something that the investors were not doing during the earlier two weeks of uncertainty. According to the market, the new fair price for the Dollar was set to be 0.8% lower than the one observed early Thursday.

However, that was before the release on the non-farm payrolls. As it turned out, job creation fell behind the expectations, causing yet another massive sell-off of the U.S. Dollar which lost 0.6% within several hours following the news, although the unemployment rate, a lagging macroeconomic indicator, ticked by 0.1% lower. As a result, the currency proved to be the most bearish currency since Oct 16, the buck performed poorly against all of its main counterparts, depreciating 2% and more against four out of eight currencies—EUR, CHF, AUD and SEK.
In the longer-term perspective the U.S. Dollar is also strongly bearish. The currency retreated as much as 1.7% within the last 20 days and 2.4% within the last six months.

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Among all of the major currencies the Great Britain Pound proved to be the most stable, deviating the least from its starting point. Even though the last five trading days were marked with significant news for the foreign exchange market as a whole and for the Sterling in particular, its equally-weighted index has gone up by merely 0.2% since Oct 18. One of such major events turned out to be a substantial increase in the Chinese money market rates, as a result of which the sentiment deteriorated and weighed upon the riskier currencies, including the Pound, damaging and benefiting the most respectively the New Zealand Dollar (-1.4%) and the Japanese Yen (+1.3%).

However, being that later the same day the Monetary Policy Committee was upbeat with respect to the economy of the United Kingdom, the dip did not extend further after the meeting; instead the currency commenced a recovery and has already fully negated the losses, gaining the most against the Canadian Dollar (+1.5%) and the New Zealand Dollar (+2.1%). At the same time the Sterling was generally performing poorly against the safe havens, such as the Japanese Yen (-0.6%) and the Swiss Franc (-1%).
In the perspective of the last 20 days the Sterling also appears to be quite stable, moving away only 0.2% down from the base value. Meanwhile, performance of the currency within the past six months is strongly bullish, it appreciated four percentage points.

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The beginning of the last week the Euro stayed buoyant. Within the first three days the common currency even appreciated 0.3%, even though its main counterpart, the U.S. Dollar, has been on the constant rise since Oct 28 despite weak fundamentals. Apparently, the market participants gave the Euro the benefit of the doubt ahead of the important macroeconomic releases that concerned inflation and the unemployment rate in the bloc. However, the data published on Thursday did not meet the expectations—the price level grew at a slower pace than expected and the labour market did not experience awaited improvement.

Accordingly, the Euro witnessed a massive sell-off across the board and the currency lost 0.9% of its value during the day. The most significant changes were observed in EUR/USD and EUR/CAD that have gone down by 2.35% and 2.5% respectively since Monday. The only peer the Euro managed to outperform turned out to be the Swedish Krona—this pair has surged 1.1% starting form Oct 28, being that the latter currency has once again proved to be highly sensitive to the monetary union’s fundamentals, just as the Euro itself, on average the Krona depreciated by 0.8%. Nevertheless, in the long-term perspective the Euro is the best-performing currency among the majors—its equally-weighted index is 4.1% higher than six months ago, while the Swiss Franc is the second best, being on average 3.8% more expensive.

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At first, on the back of strong economic data the U.S. Dollar has been on the rise. And while the FOMC statement published on Oct 30 did not convince the market participants to immediately increase their exposure to the buck, the subsequent releases, such as the falling unemployment claims and the advancing manufacturing PMI, arranged a bid tone for the Dollar. The equally-weighted index of the currency rallied 0.9% within the first three days of the observed time interval, being outperformed only by its New Zealand and Canadian counterparts.

The weekend, however, altered favourable for the Dollar sentiment. The currency started to grind lower after a two-day pause, being weighed upon by the disappointing factory orders (Nov 4); even the better-than-expected services PMI number released yesterday proved to be unable to change the downward tendency the Dollar has recently picked up.
Accordingly, for the period from Oct 30 to Nov 5 on average the currency has gained 0.5%, posting significant losses against the kiwi (-1.3%), which benefited from positive tendencies in the labour market and against the Aussie, the price of which notably increased amid the surprisingly good retail sales figure, but at the same time gaining more than 1.5% against EUR, CHF and SEK.

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Video version of the report will be available here.

• The six-month and three-year global economic expectations improved in October, a Dukascopy Bank SA poll showed. The six-month economic sentiment index advanced 0.03 to 0.62. The three-year economic outlook improved 0.06 to 0.73.
• The European six-month economic sentiment index advanced 0.04 to 0.53, the highest reading since records began in 2011. The three-year outlook climbed to 0.67, from 0.58 in September.
• Respondents became less optimistic about the six-month and three-year North American economic outlooks in October. The six-month and three-year economic sentiment indices fell to 0.63 and 0.71 accordingly.
• The Asia-Pacific six-month and three-year expectations both climbed 0.07 to 0.70 and 0.80, respectively.

Figure 3 presents the term structure of the Dukascopy Bank Sentiment Index (Y-axis) mapped against GDP growth forecasts made by poll respondents (X-axis). Overall, DBSI values and GDP growth forecasts match directionally, suggesting the global economy will perform better three years from now.
Poll respondents suggest that the European economy will expand an annualized 0.50% six month from now and 1.30% three years from now.
Respondents revised the North American six-month and three-year economic growth forecasts to 1.63% and 2.30% in October, from 1.40% and 2.13% respectively in September.
The Asia-Pacific economic growth projections are the strongest. Experts forecast growth of 3.73% and 4.03% six months and three years from now accordingly.

Figure 4 presents the business cycle and its phases - expansion (real GDP is increasing), peak (real GDP stops increasing and begins decreasing), contraction or recession (real GDP is decreasing), and trough (real GDP stops decreasing and begins increasing).
Respondents are divided on the European six-month EDS. Sixteen claim the economy will be in a recession, while fourteen say the economy will be expanding, yet twenty two expect that the regional economy will gather pace in three years time.
Majority of experts support the view that the North American economy will be expanding both six months and three years from now.
Experts are largely united about the Asia-Pacific 6-month EDS – twenty six forecast expansion and two say the economy will reach its peak. Twenty five respondents support the view that the Asia-Pacific economy will expand three years from now.

Figure 5 shows the six-month economic outlook for Europe, North America, and Asia-Pacific. The global six-month economic prospects advanced 0.03 to 0.62 in October.
The European six-month economic sentiment index advanced 0.04 to 0.53, the highest reading since records began in 2011. Six respondents (20%) are pessimistic about the economic outlook, fourteen (47%) say the outlook is “neutral” and the rest (33%) claim the outlook is “positive”.
The North American six-month economic prospects worsened. The sentiment index fell 0.04 to 0.63 from 0.67 in September. Yet nineteen experts (63%) claim the outlook is “fairly” or “definitely” positive and seven (23%) suggest the economic outlook is “neutral”.
The Asia-Pacific sentiment index inched to 0.70, up from 0.63 in September. Twenty four respondents (80%) are either “fairly” or “definitely” positive about the six-month economic outlook. Four (13%) say the outlook is “neutral”, whereas two (7%) claim the outlook is “fairly” negative.

Figure 9 presents a discrepancy in views on the economic outlook among local and foreign experts. October poll results reveal that respondents from Asia-Pacific are less optimistic about the local economic outlook compared to their foreign colleagues.
Europe: Respondents from Europe are less optimistic about the regional six-month and three-year economic outlook compared to their foreign colleagues (0.53 vs. 0.54 and 0.63 vs. 0.69 respectively).
North America: Local Experts are more optimistic about the North American six-month economic prospects (0.68 vs. 0.61). The discrepancy in opinions reaches positive 0.06 for the three-year economic outlook.

Asia-Pacific: Local respondents are less optimistic (0.68) about the Asia-Pacific six-month economic prospects compared to foreign experts (0.71). The discrepancy in views remains unchanged at a value –0.03 for the three-year economic outlook.

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Judging by the behaviour of the equally-weighted indices, before the most recent events the Japanese Yen has been failing to find its way, unlike the Euro that has been consistently bearish and the New Zealand Dollar that has been consistently bullish. Even though the currency was slightly more inclined to depreciate than to gain value, nevertheless it was fluctuating within a half of a percent from Nov 1 to Nov 6. The most likely reason for such timid performance during the first four days of the observed period was a lack of economic updates that would either reinforce the currently positive outlook on Japan or disappoint the markets and would thereby set a particular trend for the currency.

In the meantime, the initial tranquillity of the Japanese Yen has been broken by the unexpected decision to cut the rate made by the European Central Bank, as a result of which the currency covered as much as 1.3% (the largest daily range) until the end of the London trading session.
Still, it is worthy to notice that while all of the major currencies reacted to the news immediately (the single European currency plummeted 0.8% and the U.S. Dollar surged 0.7%), the index of the Yen started to move north only a few hours after the announcement, namely after the release of the U.S. GDP and unemployment claims, which, apparently, have helped the market determine an appropriate direction for the currency.

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The single currency was relatively stable for the first three days of the last week. All of that time it was trading below the base value, but losses never exceeded 0.5%. Monday was relatively calm, as most of the relevant fundamentals came out very close to their expected values. EU Economic Forecasts with worse than expected EU PPI put some pressure on the Euro on Tuesday. Mild recovery can be seen on Wednesday when Spanish Services PMI and German Factory Orders outweighed negative Eurozone Retail Sales. Most Change can bee seen on Thursday when the ECB unexpectedly cut it’s benchmark rate to 0.25%. From this alone Euro lost more than 70 basis points of value which helped other major currencies.

Friday had mainly US data releases which benefited the greenback, but had little impact on the Euro which was prior to that gradually recovering after the sell off on Thursday.
In the end of the period the Euro registered significant losses against all of the major counterparts. From 0.4% and 0.69% against loonie and Yen to 1.04% and 1.525 against greenback, kiwi and cable. The latter one was mostly influenced by the unchanged policy from the U.K. [link]. On the other side we saw only almost irrelevant gains—0.1% against aussie, 0.05% against Swedish Krona and 0.08% against Swiss franc. In aussie’s case it was is due to the disappointing data from the labour markets and in francs case due to the Swiss policymaker’s success to weaken the franc in the last month.