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Euro To Dollar – 11th February 2009

The fundamental news for the euro to dollar pair is dominated by the US data due out this afternoon, starting with the Trade Balance,  which measures the difference in value between imported and exported goods and services during the reported month – a positive number indicates that more goods and services were exported than imported and the forecast is for this to be -37B against a previous of -40.4B. Export demand and the demand for currency are directly linked, because foreigners must buy the domestic currency to pay for the nation’s exports. Export demand also impacts production and prices at domestic manufacturers. If the actual exceeds the forecast then this is good for the home currency.

This is followed by two speeches, the first of which is from Federal Reserve Governor Elizabeth Duke, entitled “Stabilizing The Housing Market” – a fascinating topic I’m sure – whether anyone has a clue is also debatable! If the statement is more hawkish than expected then this is good for the currency. This is followed by US Treasury Secretary Geitner addressing the Senate Budget Committee on the issues affecting the financial and housing markets. Quite what can be said that has not been said before, is hard to imagine – in normal circumstances this would be an important speech, but I suspect that in the current climate it will be over-shadowed by the various bailouts currently being pushed through Congress. Three hours later we then have a further speech from the Federal Reserve Bank of Chicago President Charles Evans – his topic is the economic outlook at the CFA Society of Iowa, in Des Moines. Now normally having three such noteworthy speakers commentating on the state of the market would cause some volatility, but given the current climate their words may have less impact this afternoon.

Finally as it is Wednesday we have the EIA crude oil inventory figures, which highlight the change in the number of barrels of crude oil held in inventory during the last week. There is no consistent effect that can be gauged in advance since the demand supply issue is a complex one in crude oil, and while this is primarily a US indicator, it tends to impact the oil markets and the Canadian dollar more strongly than the US dollar or the euro to dollar pair.