Economic confidence in the Euro-Zone is expected to bounce back from a record-low reading in March as policymakers continue to take unprecedented steps to shore up the economy however, as the region faces its worst economic downturn in over half a century, fears of a deepening recession could weigh on household and business sentiment.
Trading the News: Euro-Zone Economic Confidence
What’s Expected
Time of release: 04/29/2009 09:00 GMT, 05:00 EST
Primary Pair Impact : EURUSD
Expected: 65.6
Previous: 64.6
Impact the Euro-Zone Economic Confidence has had on EURUSD over the last 2 months
March 2009 Euro-Zone Economic Confidence
| Confidence in the Euro-Zone fell to a record-low of 64.6 from a revised reading of 65.3 in February amid expectations for a rise to 65.4, and deteriorating fundamentals are likely to reinforce fears of a deepening recession as OECD forecasts the economy to contract 4.1% and anticipates the unemployment rate to reach 10% this year. As households and business face the worst economic downturn in over half a century, policymakers have taken unprecedented steps to stimulate the ailing economy, and the European Central Bank is expected to lower borrowing costs further in the month ahead as the outlook for growth and inflation falter. Nevertheless, as ECB President Trichet remains reluctant to overshoot the overnight lending rate, market participants speculate that the central bank will utilize tools beyond the interest to manage monetary policy as they maintain at 2% target for price growth. | |
February 2009 Euro-Zone Economic Confidence
| Economic sentiment in the Euro-Zone unexpectedly slipped to 65.4 from a revised reading of 67.2 in January, which is the lowest reading since recordkeeping began in 1985, and the data reinforces a dour outlook for the region as growth prospects deteriorate at a record pace. Weakening fundamentals paired with increased turmoil in the banking sector continues to weigh on households and business, and as the outlook for growth and inflation falter, fears of a deepening recession could lead the European Central Bank to step up their efforts as the region is expected to face its worst economic downturn since World War II. As a result, market participants anticipate the ECB to lower borrowing costs by another 50bp in March as households and businesses turn increasingly pessimistic towards the economy, and may adopt unconventional tools to stimulate the ailing economy as the interest rate falls close to zero. | |
What To Look For Before The Release
Traders with access to market depth information via the FXCM Active Trader Platform may use it to gauge the potency of the economic data release as well as to shed some light on the market’s directional bias. Increasing volume ahead of the announcement will telegraph likely follow-through behind whatever move is to materialize, while an imbalance in available liquidity on the Bid versus the Offer side of the market will tell us the direction major institutions are likely favoring ahead of the announcement:
| Bullish Scenario:
If we see substantially deeper available liquidity on the Bid side of the market, this tells us that major price providers in the market are looking to buy the Euro against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bullish bias on EURUSD ahead of the data release. | Bearish Scenario: |
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