This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

What Will Happen to the Euro When the Eurozone GDP Numbers Come Out?

NEW YORK (TheStreet) -- Thursday may be a big day for the euro.

Figures on second-quarter gross domestic product for the eurozone including Germany and France will be released along with accompanying data on inflation, or disinflation as the case may be.

For a couple of months now, Mario Draghi, president of the European Central Bank, has been hoping for a decline in the value of the euro against the dollar. Soon after the June meeting of the ECB, the euro fell below $1.36.

At that time, hedge funds had already begun to short the euro.

Must Read: John Browne: Europe Has Energy Options to Loosen Putin's Grip

On July 30, the value of the euro dropped below $1.34. At that time, there were expectations the euro might drop to as low as $1.32 sometime this year.

By the time of the last meeting of the ECB there were further expectations that the euro might even fall to $1.30. On Wednesday, the euro was trading around $1.3370.

Since then all the news coming out about the state of the various national economies in the eurozone have indicated that Europe may be much weaker than it had been thought. So today's data loom large.

Apparently, the hedge funds and other large speculators believe the data on the economy of the eurozone will come in very weak. These fund sources have, according to the Commodity Futures Trading Commission, bet more for a decline in currencies against the euro that at any time in the past two years.

The problem with putting in bets at this stage is that a lot of the "bad" economic news is priced into the market. For the market value to fall further, the economic news would have to be even worse than expected.

If the data indicate the hedge funds and others have been too pessimistic, then the value will rise. This is apparently what happened in two earlier situations when large bets had been made for the decline in the euro -- May 2010 and June 2012. In each case the value of the euro rose rather dramatically after reaching relatively low levels.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $92.69 -0.59%
FB $119.49 1.43%
GOOG $711.11 1.40%
TSLA $214.93 1.61%
YHOO $37.23 0.79%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs