Short covering drives euro higher

The euro is currently in the black versus the US dollar, as dealers are closing out their short positions on the currency.

Yesterday morning saw poor manufacturing data from Spain, which weighed on the euro. However, today the single currency is trading at $1.3585, up 0.3% on the day, as traders who were short yesterday have taken the opportunity to lock in profits.

Traders have shrugged off comments from former European Central Bank (ECB) member José Viñals, who indicated that the central bank still has room to reduce interest rates further. In early November the ECB cut interest rates to 0.25%, and now inflation is low while growth remains sluggish. This is why Mr Viñals believes further interest-rate cuts could be an option.

Traders are now looking ahead to the US ADP employment report due tomorrow at 1.15pm. This could provide an indication of what to expect from the unemployment-rate announcement at lunchtime on Friday. The Federal Reserve has tied its monetary policy to the jobless rate, and if the job market improves we could see traders selling EUR/USD.

Spot FX EUR/USD chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.