The Euro/USD changed direction and sharply declined yesterday by nearly one percent; this came after Bernanke’s testimony that disappointed traders for not mentioning any QE3 on the one hand and his optimism of the recovery of the US economy. The ECB announced the second LTRO three year loan plan.. There are several items on today’s agenda including USD jobless claims and Bernanke’s testimony.
Here is a short outlook for the Euro /USD for March 1st:
Forex Market February Update:
The Euro to US Dollar sharply fell by 0.99% on Wednesday to 1.3325; during February, the EUROS/USD increased by 1.8%. Furthermore, the AUD and CHF also depreciated against the USD.
The chart below shows the recent developments of the Euro to US Dollar during February (UTD).
ECB announced yesterday the second three-year loan to European commercial banks. The recent LTRO rescue fund was set at €529.5 billion (nearly $714 billion). This LTRO plan may have helped pull down the Euro as it was more than many had anticipated. This also raises the concern of lowering the Euro value.
Correlations among Exchange Rates – March 1st
The chart herein shows the development of the linear correlation (moving correlation) between the Aussie dollar and the Euro/U.S dollar (daily percent changes) during the past several months (up to February 29th).
Based on the chart the correlation between the two exchange rates has weakened. Currently the linear correlation between the two daily percent changes of these currencies is nearly 0.56 for February. This might suggest the influence of the Euro/USD on the direction of the AUD/USD is weaker today than it was a few months back.
Current Forex Indexes March 1st
Euro to US Dollar is traded at 1.3344 a 0.07% increase as of 12:22*.
GBP to USD rate is at 1.5958 a 0.28% increase as of 12:22*.
Forex Related News for the Day
Department of Labor Report – U.S. Jobless Claims: initial claims remained unchanged at 324,000 claims for the week ending on February 17th; the number of insured unemployment fell by 52,000 to 3,392 thousand in the week of February 11th; the upcoming weekly update might affect the forex and commodities markets;
Bernanke Testifies: following his testimony on Wednesday, Bernanke is set to testify again on Thursday before the Committee on Financial Services, of the U.S. House of Representatives; the title of the speech is “Semiannual Monetary Policy Report to the Congress”;
Euro to USD Daily Outlook
I speculate the Euro will probably bounce back from yesterday’s sharp tumble. The upcoming jobless claims update could affect the direction of the USD and Bernanke’s testimony may also affect the financial markets if there will be big headlines from this testimony .
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