EUR/USD Fundamental Analysis August 24, 2012, Forecast

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Analysis and Recommendations:

The EUR/USD is trading at 1.2542.

The FOMC minutes were notably dovish, as “many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery”. The minutes suggest that at the September meeting the Fed will: 1) extend policy guidance beyond 2014; 2) announce a new asset purchase program (QE3); 3) introduce a new form of flexibility into QE, whereby the ultimate size and timing of the purchases would be open-ended; 4) introduce conditions surrounding QE3, potentially even targeting economic measures; finally 5) changes to interest on reserves or the introduction of a UK styled LFS are likely not a near-term option.

Economic releases from Europe were EUR positive as manufacturing PMIs were generally above expectations and July’s print coming in at 45.3 in Eurozone, 45.1 in Germany and 46.2 in France. In addition, German Q2 GDP came in as expected at 0.3%q/q; however exports, capital investment and consumption were all stronger than expected.

Market sentiments got a bolster after hopes of further monetary easing from the U.S, pushing all major asset classes into positive territory, but a weak Chinese PMI, a 9-month low, trimmed some of the initial gains. However, distressing manufacturing figures from China raised calls for Beijing to add to stimulus efforts keeping the sentiments upbeat. The weekly unemployment numbers were pretty close to the forecast, enough to be considered market null. Bloomberg market sentiment came in higher than previous and manufacturing PMI was positive. Later after this writing, US home sales will be released which could give a bump to the USD.

Also, German Chancellor Angela Merkel and French president François Hollande are expected to converge in Berlin today to discuss on possible bond buying measures by the ECB and on adjustment over the interest on the Greek bailout loans. With crisis in Europe showing no signs of backing, Greek Prime Minister Antonis Samaras will hold this week his first meetings with Euro zone leaders since taking office in a bid to assure for more austerity measures. Overall, the market mood for the balance of the week is likely to revolve around the U.S data and European leader’s meeting.

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 23, 2012 actual v. forecast

Aug. 23

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

47.80

 

 

 

49.30 

 

 

EUR

 

 

 

German GDP (QoQ) 

0.3%

 

0.3%

 

0.3% 

 

 

EUR

 

 

 

German GDP (YoY) 

0.5%

 

0.5%

 

0.5% 

 

 

EUR

 

 

 

French Manufacturing PMI 

46.2

 

43.6

 

43.4 

 

 

EUR

 

 

 

German Manufacturing PMI 

45.1

 

43.4

 

43.0 

 

 

SEK

 

 

 

Swedish Unemployment Rate 

7.00%

 

7.20%

 

8.80% 

 

 

EUR

 

 

 

Manufacturing PMI 

45.3

 

44.2

 

44.0 

 

 

NOK

 

 

 

Norwegian GDP (QoQ) 

1.2%

 

1.0%

 

1.5% 

 

 

GBP

 

 

 

BBA Mortgage Approvals 

28.4K

 

28.2K

 

25.9K 

 

 

GBP

 

 

 

CBI Distributive Trades Survey 

-3

 

15

 

11 

 

 

USD

 

 

 

Initial Jobless Claims 

372K

 

365K

 

368K 

 

 

USD

 

 

 

Continuing Jobless Claims 

3317K

 

3300K

 

3313K 

 

 

USD

 

 

 

New Home Sales 

 

 

365K

 

350K 

 

Upcoming Economic Events that affect the CHF, EUR, GBP and North American markets

Aug. 24

08:00

 

HUF

 

 

Hungarian Retail Sales (YoY) 

 

 

-2.40% 

 

-2.50% 

 

09:30

 

GBP

 

 

Business Investment (QoQ) 

 

 

2.8% 

 

1.9% 

 

09:30

 

GBP

 

 

GDP (QoQ) 

 

 

-0.5% 

 

-0.7% 

 

09:30

 

GBP

 

 

GDP (YoY) 

 

 

-0.6% 

 

-0.8% 

 

13:30

 

USD

 

 

Core Durable Goods Orders (MoM) 

 

 

0.5% 

 

-1.4% 

 

13:30

 

USD

 

 

Durable Goods Orders (MoM) 

 

 

2.4% 

 

1.3% 

Government Bond Auctions

Date  Time  Country 

23/8  05:45  Japan 

23/8  11:30  UK 

23/8  19:00  US 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

 

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