This week began with a relatively quiet trading session; however this calmness is likely to end today. The German ZEW Economic Sentiment and the U.S. Long-Term Purchases reports look to create large volatility in the market today. In addition, the problematic Greek economy is likely to continue and affect the market today.
The Dollar saw a very stabile session during yesterday's trading. The Dollar continues to trade at a very high rate against the Euro, as the EUR/USD has bottomed at the 1.3578 level, trading near a 9-month low.
The Dollar's trading was quite flat yesterday, mainly because U.S. banks were closed in observance of President's Day. There seems to be two main reasons that keep the Dollar at its strong form at the moment. The first reason is the European concerns regarding Greek debt. Investors still have fears regarding a possible slowdown in the Euro-Zone economic recovery. This leads them to look for safe haven investments such as the Dollar and the Yen, and retains the Dollar's bullish tend against most of the major currencies. In addition, the Dollar is also affected by the prices of crude oil. Crude oil dropped almost consistently for the past 4-weeks, further boosting the Dollar.
Looking ahead to today, the most impacting event on the economic calendar looks to be the Long-Term Purchases report, which will be released at 14:00 GMT. This report measures the difference in value between foreign long-term securities purchased by U.S. citizens and U.S. long-term securities purchased by foreigners during December. This reports the trust of foreign investors in the U.S. economy, and thus has a large impact on the Dollar. If the end result will reach above expectations for 50.3B, the Dollar is likely to strengthen as a result.
EUR - German ZEW Economic Sentiment on Tap
The Euro continues to weaken against the major currencies. The Euro dropped against the Dollar, the Pound and the Yen during yesterday's trading. The Euro is currently trading near a 9-month low against the Dollar.
The Euro dropped further vs. the major currencies mostly due to market concerns over Greek debt. For the time being, the European leadership refuses to expose their rescue plan for the Greek economy. This keeps a high level of uncertainty in the market regarding the Euro-Zone economic recovery. The lack of progress by the Euro-Zone's leadership during the last 2 weeks is turning investors to look for safer investments, and by so to weaken the Euro. It currently seems that the Greek deficit crisis has potential to weaken the Euro further, especially against the Dollar and the Yen.
