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XE Market Analysis: Deutsche Bank Drags Euro Lower

OVERVIEW

  • The Euro is weaker today as shares in Deutsche bank dropped below €10 for the first time ever. This in turn, dragged European shares to an eight week low.
  • The Pound is steady today as British consumer confidence increased significantly in September according to the GFK survey. This brings confidence figures back to pre-EU referendum levels. 
  • The Dollar is weaker after US consumer spending unexpectedly fell in August.

HIGHLIGHT

European Shares have been dragged lower by the Deutsche Bank share price collapsing to an all-time low. The German Bank has been under significant pressure over the past few weeks and rumors that hedge funds are short selling the stock have fueled the selloff. This has in turn, weakened the single currency.

US DOLLAR

The Dollar is weaker today after consumer spending fell for the first time in seven months in August. This gives the FED mixed signals and makes their upcoming interest rate decision on November 2nd even more difficult.

BRITISH POUND

The Pound looks steady after both UK consumer confidence figures and GDP figures outperformed forecasts. Consumer confidence is back to pre-Brexit levels and the 2nd quarter GDP figure was today revised to 0.7% from the initial 0.6% estimate.

EURO

The single European currency remains under pressure as indices across Europe are lower following the sharp selloff in bank stocks, particularly Deutsche stock. This negative sentiment was compounded by the confirmation that the Euro area unemployment rate remains high at 10.0%.

CANADIAN DOLLAR

The Loonie remains well supported by the recent surge higher in the price of crude oil. This week’s OPEC meeting and seemingly good relationship between the members have given oil prices a new lease on life. Looking ahead, the Loonie looks vulnerable to any reversal in the crude oil prices.

AUSTRALIAN DOLLAR

The Australian Dollar remains sturdy as it looks like the string of interest rates cuts may now have come to an end as the new RBA governor Philip Lowe recently hinted. Accordingly, the future of the Aussie looks like it will be directly linked to the carry trade and ‘risk on/risk off’ trade.

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