The most relevant event this week was the FOMC minutes. As I said, the Fed is unwilling to raise the interest rates soon. Janet Yellen said that even with the progressive improvement of the US economy the FOMC members declined the interest rate hike. They are waiting that some of the economic indicators will improve, as soon it happened, they would rise the interest rates. The Greek outcome is a high risk, the doubts about the Eurozone. In Asia, China has created a bubble in the stock market, it has raised 145% since the last year. Also the geopolitical problems around the glove obstuct this decision.
UK released an improvement on the wages which is really important to increase the demand and boost the investments and GDP.
Greece, once again, borrowed €2.9 billion with the ELA program. All people are scared about what can happen on monday. J. P. Morgan signaled that tomorrow is the day in which the ECB should take a decision. There are more cash than deposists, they have broken the Target2 credit limit imposed by the ECB. How will the markets react if a Greece leaves the Eurozone? What will the markets reaction be if a Greece leaves the Eurozone?
Relationship between US 10Y T-Note, Euro Bund and EURUSD
If you trade fx, what you are really trading are interest rates. Your trading can be based on future expectations about how the different economies will behave. Sadly to do that, you need a really big amount of money. Anyway, it's good to have in mind.
As you can see, each time that the spread between US 10Y T-Note and Euro Bund increases the EURUSD decreases. The EUR has strenghten since mid-April because the spread has reduced.
We will see what happen in the next week, thank you for visiting Fx and Fixed Income Trading Blog.
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