Euro Hits Fresh 6-Month Low

The Eurocontinued its collapse on Friday, hitting fresh 6-month lows near 1.4660 as interest rate expectations remain in control. Indeed, Credit Suisse overnight index swaps are still pricing in nearly 40bps worth of cuts by the European Central Bank within the next 12-months.

Looking ahead to next week, the Euro may only serve as an anti-dollar trade, though there will be a few indicators to watch. First, the release of the German ZEW survey on Tuesday tends to ignite short-term volatility for the Euro. On Thursday, the August PMI readings for the manufacturing and services sector will be released, and both are anticipated to remain below 50 (signaling a contraction in business activity).