EUR/USD Fundamental Analysis February 10, 2012, Forecast

Economic Events: (GMT)

07:00     EUR       German CPI (MoM)                        -0.4%                     -0.4%    

The German Consumer Price Index (CPI) measures the changes in the price of goods and services purchased by consumers.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR             

08:15     CHF        CPI (MoM)                                          -0.3%                     -0.2%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation. 

A higher than expected reading should be taken as positive/bullish for the CHF, while a lower than expected reading should be taken as negative/bearish for the CHF.                           

 09:30    GBP       PPI Input (MoM)                               0.4%                     -0.6%    

Producer Price Index (PPI) Input measures the change in the price of goods and raw materials purchased by manufacturers. The index is a leading indicator of consumer price inflation.

A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP  

13:30     USD       Trade Balance                                   -48.4B                   -47.8B

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.                           

 14:55    USD       Michigan Consumer Sentiment Index     74.3                       75.0

The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.                          

 17:30    USD       Fed Chairman Bernanke Speaks

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to speak. As head of the Fed, which controls short term interest rates, he has more influence over the U.S. dollar’s value than any other person. Traders closely watch his speeches as they are often used to drop hints regarding future monetary policy.

His comments may determine a short-term positive or negative trend.                                                                                                

19:00     USD       Federal Budget Balance                                                -65.2B                   -86.0B  

The Federal Budget Balance measures the difference in value between the federal government’s income and expenditure during the reported month. A positive number indicates a budget surplus, a negative number indicates a deficit. 

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

EUR/USD Fundamental Analysis February 10, 2012, Forecast

Analysis and Recommendations:

The EUR/USD is up trading at 1.3289 increasing by 0.21%. The euro reached as high as 1.3320 after news of an agreement between Greek political factions. The USD as its counterpart fell. Good news for US jobs market as unemployment claims fell again this week. The news barely registered with the markets as it was almost immediately followed by the release of the agreement in Greece. The euro dipped against the dollar for a bit and then soared back to life.

The European Central Bank (ECB) has decided to keep its key lending rate unchanged for another month, in line with what most analysts have been expecting. Politicians in Spain, France and Italy were hopeful that the ECB would cut rates to offset rising debt burdens and help save them from further ratings downgrades. Greece, Portugal and Ireland, the three countries already in receipt of bailout funds from Brussels, were also keen to see lower rates that would cut their borrowing costs and, in the case of Lisbon and Dublin, prevent the need for further bailouts.

Following a recent post to his Twitter account, Greek Prime Minister Luca Papademos’s office announced this afternoon that talks “were successfully concluded.”

These things will happen in this order:

1. Greek Parliament passes austerity legislation
2. Troika approves second bailout
3. PSI deal completed

The Parliamentary vote is expected on Sunday and the bond swap is supposed to start Monday. All the deals appear to be in place, so it’s possible but there is not much room for error. Expect a very skittish market late Friday, Sunday and Monday. Investors will be edgey as anything can make this deal fall apartm. Germany has not be heard from as of this time. 

Thursdays Economic Reports ( actual v. forecast )

Scheduled Sovereign Bond Sales

Feb 10  11:00  Belgium  OLO auction