EUR/USD Fundamental Analysis August 16, 2012, Forecast

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Analysis and Recommendations:

The EUR/USD is trading at 1.2276, markets are fairly quiet today, as summer winds down and the last of summer vacations comes to an end with schools reopening shortly.

European Economic and Monetary Affairs Commissioner Olli Rehn stated that Spain’s government is considering a request for a sovereign bailout after earlier accepting 100 billion euro of aid to help the nation’s banks, reports Bloomberg.

“The Spanish government has an open mind on this issue, but no decision has been made. We stand ready to act if there is a request,” said Rehn.

Spanish 10-year bond yields reached record maximum of 7.62% on July 24. Yesterday yields eased to 6.72%. Another euro zone’s nation, Belgium, on the contrary, sold 3-month bills at negative yield. In other words, investors paid to lend Belgium money. Rehn underlined that this is “not a healthy phenomenon”, but a “sign that the euro-zone economy is not doing well”.

 Today’s figures disappointed the market after positive data released yesterday. Lower inflation and tumbling manufacturing activity is just what the Fed has been worried about. The figures increase the odds of QE3. US consumer prices were unchanged in July (vs. +0.2% expected). Core CPI, which excludes the volatile categories of food and energy, rose by 0.1% (vs. 0.2%) expected. Empire State manufacturing index fell to -5.9 in August from 7.4 in July, showing the biggest miss in 14 months.

Another lazy August day and we have more mixed signals from the various market classes as bonds dump the safe havens, currency markets embrace the safety of the USD, and equities and most of the energy and metals commodities are hitting the sell button to go golfing.  Bond markets are exhibiting a gentle bias in favor of the strained European peripherals with yields on Italian and Spanish 10s pushing lower while yields on the safe havens like Treasuries, bunds, Canada’s and gilts are gently rising.  The USD is gaining strength so far in a very light volume day.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports

Economic Data August 15, 2012 actual v. forecast

 

 

Currency

 

 

 

Event 

actual

 

forecast

 

previous

   

Aug. 15

 

AUD

 

 

 

Westpac Consumer Sentiment 

-2.50%

 

 

 

3.70% 

 

 

 

 

AUD

 

 

 

Wage Price Index (QoQ) 

1.0%

 

0.8% 

 

0.9% 

 

 

 

 

TRY

 

 

 

Turkish Quarterly Unemployment Rate 

8.20%

 

8.90% 

 

9.00% 

 

 

 

 

GBP

 

 

 

Average Earnings Index +Bonus 

1.6%

 

1.8% 

 

1.5% 

 

 

 

 

GBP

 

 

 

Claimant Count Change 

-5.9K

 

6.0K 

 

1.0K 

   

 

 

GBP

 

 

 

MPC Meeting Minutes 

 

 

 

 

 

 

 

 

 

USD

 

 

 

Core CPI (MoM) 

0.1%

 

0.2% 

 

0.2% 

 

 

 

 

USD

 

 

 

CPI (MoM) 

0.0%

 

0.2% 

 

0.0% 

 

 

 

 

USD

 

 

 

NY Empire State Manufacturing Index 

-5.8

 

6.5 

 

7.4 

 

 

 

 

USD

 

 

 

CPI (YoY) 

1.4%

 

1.6% 

 

1.7% 

 

 

 

 

USD

 

 

 

Core CPI (YoY) 

2.1%

 

2.2% 

 

2.2% 

 

 

 

 

USD

 

 

 

TIC Net Long-Term Transactions 

9.3B

 

63.0B 

 

55.9B 

   

 

 

USD

 

 

 

Industrial Production (MoM) 

0.6%

 

0.5% 

 

0.1% 

   

 

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Date

Time

Currency

Event  

Forecast

Previous

Aug 16

9:00

CHF

ZEW Economic Expectations

 

-42.5

 

9:00

EUR

CPI y/y

2.4%

2.4%

 

12:30

USD

Building Permits

0.77M

0.76M

 

12:30

USD

Unemployment Claims

365K

361K

 

12:30

USD

Housing Starts

0.76M

0.76M

 

14:00

USD

Philly Fed Manufacturing Index

-4.3

-12.9

Aug 17

6:00

EUR

German PPI m/m

0.4%

-0.4%

 

8:00

EUR

Current Account

7.8B

10.9B

 

13:55

USD

Prelim UoM Consumer Sentiment

72.5

72.3

Government Bond Auctions

Date  Time  Country 

Aug 16  09:30  UK

Aug 16  15:00  US 

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About: FX Empire Analyst - Barry Norman

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