EUR/USD Fundamental Analysis July 27, 2012, Forecast

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Analysis and Recommendations:

The EUR/USD shot above 1.23 in today’s session and is trading at 1.2299 after comments from the ECB strengthened the euro and changed market sentiment.

Today, the President of the European Central Bank vowed to preserve the continent’s monetary union. Draghi said that the “ECB will do whatever it takes to preserve the euro,” within the EU mandate, apparently providing the assurance markets needed to rally. Draghi said that the ECB already has the mandate to intervene and that he would do all that it takes.

Draghi said that “and believe me, it will be enough”. In addition, when referencing the European bond market he commented that “to the extent that the size of these sovereign premia hampers the functioning of the monetary policy transmission channel, they come within our mandate”. These comments are the strongest we have heard from the central banker and provide significant reassurance that the ECB will not simply sit idly by.

Market mood was seen anguish after EU officials said Greece had a little hope of meeting the terms of the bailout, casting fresh concerns over the existence of the country in the zone. Looking ahead some key economic indicators from the U.S are on cards which include durable goods orders, weekly jobless claims and pending home sales.

In a surprise turn around today, US eco data surprised economists. Durable goods showed business cut back on orders for long-lasting U.S. factory goods last month if aircraft and other transportation equipment are excluded, but overall durable goods exceeded expectations. The mixed data shows that U.S. manufacturing continues to suffer. The Commerce Department said that orders for durable goods rose a seasonally adjusted 1.6 percent in June, but orders actually fell 1.1 percent, the third decrease in four months, without transportation.

The most recent government employment data, released Thursday, was met with some skepticism because of a one-time hiring shift by U.S. auto manufacturers.

The Labor Department reported that applications fell to a seasonally adjusted 353,000, down from a revised 388,000 the previous week. It was the biggest drop since February 2011.

The four-week average, a less volatile measure, declined 8,750 to 367,250, the lowest since the end of March. However, factories that are usually shut down by auto makers were kept open this year because of demand, which skewed results somewhat.

With the housing sector in the U.S showing signs of consolidation after lingering in the doldrums since the recession in 2009, the pending home sales data in the evening session could illustrate a fall in sales of pending homes in June in line with the yesterday’s unprecedented fall in new home sales.  The GDP number from the U.S on Friday is most likely to paint a tortures figure with growth slowing to 1.40 percent in contrast to 1.90 percent, a sign of further impeding for the financial markets. Overall, the week is likely to remain incarcerated to the developments in Europe and the U.S economic data

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 July 26, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Jul. 26

 

KRW

 

 

 

South Korean GDP (QoQ) 

0.4%

 

0.5% 

 

0.9% 

 

 

 

 

JPY

 

 

 

BoJ Governor Shirakawa Speaks 

 

 

 

 

 

 

 

 

 

EUR

 

 

 

GfK German Consumer Climate 

5.9

 

5.8 

 

5.8 

 

 

 

 

USD

 

 

 

Core Durable Goods Orders (MoM) 

-1.1%

 

0.1% 

 

0.8% 

   

 

 

USD

 

 

 

Durable Goods Orders (MoM) 

1.6%

 

0.4% 

 

1.6% 

   

 

 

USD

 

 

 

Initial Jobless Claims 

353K

 

380K 

 

388K 

   

 

 

USD

 

 

 

Continuing Jobless Claims 

3287K

 

3310K 

 

3317K 

   

 

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

Date

Time

Currency

 Event

Previous

Jul 27

27th-31st

GBP

Nationwide HPI m/m

-0.6%

All Day

EUR

German Prelim CPI m/m

-0.1%

7:00

CHF

KOF Economic Barometer

1.16

12:30

USD

Advance GDP q/q

1.9%

13:55

USD

Revised UoM Consumer Sentiment

72.0

Government Bond Auctions

Date  Time  Country 

Jul 27  09:10  Italy

Jul 27  17:00  US

 

 

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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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