EUR/USD Fundamental Analysis July 31, 2012, Forecast

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Analysis and Recommendations:

The EUR/USD dipped today at trade at 1.2231 after two days of market elation over statements by ECB President Draghi and resounding support from Merkel and Hollande, traders took the weekend to look at what plans or course of action would be taken. After the grand announcements that seems to be no follow through as of yet. Junker from the Eurogroup said that the ECB is going to follow through with the plans announced on June 29th to purchase government debt and used the EFSF.

President Draghi will meet with Bundesbank President Weidmann to talk policy, as Draghi is set to discuss rate cuts, bond purchases, and the potential for a new LTRO.  Eurozone confidence indicators remain challenged, and PMIs set to be released later this week are expected to show ongoing difficulties across the region.  The urgency for ECB action was prompted by the recent rise in Spanish and Italian government bond yields, forcing Draghi to talk of doing ‘whatever it takes preserve the euro’ and helping to stem the decline in EUR that fell toward 1.2050 on July 24th.  Spain’s 10Y yield is currently at 6.59%, while Italy’s is at 6.03%, the latter of which had a relatively strong debt auction this morning.  Regardless of the outcome of this week’s events, the path for EUR remains tilted to the downside as ECB action will spur further declines relative to the USD, while conversely, the absence of any effective effort will force market participants to further reduce risk and sell EUR.

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 for July 30, 2012 actual v. forecast

Date

Time

 

Currency

 

Importance

 

Event

Actual

 

Forecast

 

Previous

 

 

Jul. 30

00:50

 

JPY

 

 

 

Industrial Production (MoM) 

-0.1%

 

1.5% 

 

-3.4% 

 

 

 

02:00

 

AUD

 

 

 

HIA New Home Sales (MoM) 

2.8%

 

 

 

0.7% 

 

 

 

10:20

 

EUR

 

 

 

Italian 10-Year BTP Auction 

5.96%

 

 

 

5.82% 

 

 

 

11:00

 

GBP

 

 

 

CBI Distributive Trades Survey 

11

 

15 

 

42 

  

 

Upcoming Economic Events that affect the CHF, EUR and GBP

Date

Time

Currency

Event 

Forecast

Previous

Jul 31

6:45

EUR

French Consumer Spending m/m

 

0.4%

 

7:55

EUR

German Unemployment Change

 

7K

 

9:00

EUR

CPI Flash Estimate y/y

 

2.4%

 

9:00

EUR

Unemployment Rate

 

11.1%

Aug 1

1st-8th

GBP

Halifax HPI m/m

 

1.0%

 

7:15

EUR

Spanish Manufacturing PMI

 

41.1

 

7:45

EUR

Italian Manufacturing PMI

 

44.6

 

8:30

GBP

Manufacturing PMI

 

48.6

Aug 2

7:00

EUR

Spanish Unemployment Change

 

-98.9K

 

7:15

CHF

Retail Sales y/y

 

6.2%

 

7:30

CHF

SVME PMI

 

48.1

 

8:30

GBP

Construction PMI

 

48.2

 

11:00

GBP

Asset Purchase Facility

 

375B

 

11:00

GBP

Official Bank Rate

0.50%

0.50%

 

11:45

EUR

Minimum Bid Rate

0.75%

0.75%

 

12:30

EUR

ECB Press Conference

  

Aug 3

8:30

GBP

Services PMI

 

51.3

 

9:00

EUR

Retail Sales m/m

 

0.6%

Government Bond Auctions

Date  Time  Country 

Jul 31  00:30  Japan

Jul 31  09:30  Belgium

Aug 01  09:30  Germany

Aug 01  10:00  Norway

Aug 01  13:00  US

Aug 02  08:30  Spain 

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About:FX Empire Analyst - Barry Norman

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