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At the time of writing, the Euro has risen against the Dollar and is standing at 1.2355 but this rise is unlikely to last and will give traders an excellent low risk high reward shorting opportunity. Let’s look at the reasons for the rise, why the Euro should fall and how to get into the market.

The bearish fundamentals behind the Euro’s fall are well known with sluggish growth and many countries suffering from huge levels of debt with Greece being the country which has been in the news most but there are many others. The rally is on, so what’s behind it?

Markets move to the fundamentals long term but move to sentiment in the short term and the fact is there are just to many speculators short the Euro and to see this all you have to look at is the free CFTC Commodity Futures Trading Commission data which shows speculators, boosted their bets short against the Euro in the week ended June 8, to just below record levels.

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Categories : Economy
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The consensus of analysts that an appreciation of 10% in the euro exchange rate is causing a decline of one percentage point growth in the euro zone during the last two years, with a special emphasis in the second period. ‘Maintaining a high euro reduces Europe’s ability to generate wealth, and that makes it a less competitive area, explains a specialists of the euro economy. But in reality, this impact is not as easy to define, since it involves many nuances. For example: a strong currency attracts foreign investments in all asset classes. Another, the oil that is traded in dollars, has risen 95% in a year and a half, but the cost measured in euros has increased by 33%.

To what extent is damaging the appreciation against the dollar?

Very important, but not as much as it used to be in the past. The USA is no longer the largest trading partner on the bloc. The United Kingdom accounts for 16% of the exports of the euro area, while the U.S. equivalent to 14% and the rest is divided among various partners. ‘The most relevant to the regional economy is not crossing against the dollar, but the effective exchange rate, against major trading partners,’ says Anton Brender, Chief Economist at Dexia Asset Management. ‘An ideal combination would be a slight appreciation against the dollar, which would reduce the oil bill, and depreciation against other currencies, “suggests Brender. But, of course, that perfect combination is something that currently is not happening.

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Categories : Economy
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