EUR/USD: a poor performance overnight - Scotiabank

Analysts at Scotiabank noted that EUR/USD had been weak and was underperforming all of the G10 currencies with the exception of GBP and NZD, weakening into and through the release of softer ZEW expectations data for both the euro area and Germany. 

Key Quotes:

"Bund spreads were widening on the back of a notable rise in 10Y yields for both Spain and Italy—the latter up over 9bpts on the day. The German 2Y yield is testing a fresh multi-month low at levels last seen in mid-June."

"For EUR, the crucial Germany-U.S. 10Y spread had been pushing back toward -180bpts at the lower end of its range from mid-July."

"Risk is elevated into Friday’s Jackson hole speeches, given expectations for a steady tone from ECB President Draghi and given that bullish speculative CFTC positioning remains extended at record/multi-year highs (gross/net long, respectively). Risk reversals are neutral."