Euro struggles vs dollar

Swissquote Bank Research Team Swissquote Bank Ltd

Trading sideways against the greenback since June in the 1.16 range, EUR fell most during last week’s Turkish lira collapse. Despite growth and improving sentiment indicators, the single currency continues to weaken against the USD while USD/TRY trend goes in the opposite direction. Fact: the euro does not constitute a safe haven. Currently trading at 1.1327, EUR/USD is expected to decline further, approaching the 1.1300 range

Supported by stronger than expected German Q2 GDP and inflation at 2%, the EU economy is doing well. Given at 0.40% and 2.20% on quarterly and yearly basis, GDP remains strong, a reassuring sign for the European Central Bank, whose normalization schedule remains: next rate hike expected in Q3 2019. However, as Italian debt continues to grow and concerns over Italy’s Prime Minister Giuseppe Conte’s plan to increase tax cuts and benefit spending are rising, the EU will probably face headwinds in coming months. Due in October, Italy’s budget, if increased, could raise Italy’s costs and cause a domino effect on EU banks holding Italian debt. Although economic vital signs favour a rate rise in 2019, the ECB will stay cautious in the coming months, as further uncertainties would delay a rate hike, a non-EUR-positive argument for the single economy.

Stay on top of the markets with Swissquote’s News & Analysis

Author

Swissquote Bank Research Team

Swissquote Bank Ltd

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.