EUR/USD Fundamental Analysis August 20, 2012, Forecast

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Analysis and Recommendations:

The EUR/USD is trading at 1.2322 as the US dollar regained some momentum.

Eurozone current account came in at +15.7bn; while the trade balance came in at +10.5bn partially driven by an m/m export increase of 2.4%. Finland’s foreign minister confirmed that they have prepared for break‐up scenarios; but later suggested that his comments were misrepresented in the media.

After a relatively quiet week, Friday is off to a similar start. Most asset classes are close to yesterday’s close, with limited news flow over the last 12‐hours. Chancellor’s Merkel support of ECB bond purchases (as laid out by President Draghi) is EUR positive; however for most currencies the threat of substantial event risk, beginning on August 31 with Chair Bernanke’s Jackson Hole speech, has forced trading patterns into ranges. Interesting, as the US data set has improved and provided reassurance that the first half of Q3 did not deteriorate further, the factors that influence future growth are widely negative. Oil prices have rallied 24% since bottoming at the end of June; while US yields have jumped substantially higher; both will weigh on the consumer, but also profitability of most corporate. Accordingly, we continue to believe that the Fed will still look towards further policy easing. Next week’s FOMC minutes might provide some early clues.

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 17, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

 

 

EUR

 

 

 

German PPI (MoM) 

0.0%

 

0.4% 

 

-0.4% 

 

 

 

 

EUR

 

 

 

German PPI (YoY) 

0.9%

 

1.3% 

 

1.6% 

 

 

 

 

EUR

 

 

 

Current Account 

12.7B

 

11.1B 

 

10.3B 

  

 

 

EUR

 

 

 

Trade Balance 

10.5B

 

5.4B 

 

6.8B 

  

 

 

CAD

 

 

 

Core CPI (MoM) 

-0.1%

 

0.2% 

 

-0.4% 

 

 

 

 

CAD

 

 

 

CPI (MoM) 

-0.1%

 

0.2% 

 

-0.4% 

 

 

 

 

CAD

 

 

 

CPI (YoY) 

1.3%

 

2.0% 

 

1.5% 

 

 

 

 

USD

 

 

 

Michigan Consumer Sentiment 

73.6

 

72.4 

 

72.3 

 

 

 

 

USD

 

 

 

Michigan Inflation Expectations 

3.6%

 

 

 

3.0% 

  

 

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

        Date

Time

Currency

Event 

Previous

Aug 21

8:30

GBP

Public Sector Net Borrowing

12.1B

 

10:00

GBP

CBI Industrial Order Expectations

-6

Aug 22

14:00

USD

Existing Home Sales

4.37M

 

14:30

USD

Crude Oil Inventories

-3.7M

 

18:00

USD

FOMC Meeting Minutes

 

 

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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