Euro Getting Little Help From Fed, GDP?
Today’s Spotlight Market
The September Euro contract finds itself under pressure once again this morning, after US GDP data which showed an upward revision to the prior quarter.? Janus? Bill Gross also stated that he believed the Federal Reserve will raise interest rates in their September meeting.? Mr. Gross is certainly a bit more confident in his assessment than the market, which is only pricing in a 44% probability based on the Fed Funds futures.? A rate hike could be viewed as Dollar positive and Euro negative.
Fundamentals
The Bureau of Economic Analysis reported 2.3% GDP growth in the US.? While this was slightly lower than the 2.5% consensus expectation, consumer spending was stronger than expected and the previous quarter?s GDP was revised up from -0.2% to 0.6%.? The numbers are hardly jaw-dropping, however, and any positive data out of the US has the potential to place bearish pressure on the Euro.?
The most recent policy statement from the Federal Open Market Committee seemed to be a non-event, as the central bank left interest rates unchanged.? However, the altering of the comment regarding the labor market has planted the seeds in traders? minds that the Fed might raise interest rates in September if the next two Non-Farm Payroll reports show improvement. Many now believe that positive job numbers would trigger a rate hike, even if the Fed?s 2% inflation target is not met.?
The ongoing Greek financial crisis certainly emphasizes the fact that European leaders need to have groundwork in place for the next crisis.? The bailout last week gave the currency a mild bounce, but there is simply nothing else for the Eurozone to hang its hat on.
————————————————————————————————–
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control. Derivatives involve substantial risk and are not appropriate for all investors. Please read the “Disclosure Statement for Futures and Options” prior to investing in futures or options. For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply.
?