EUR/USD Fundamental Analysis September 17, 2012, Forecast

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Analysis and Recommendations:

The EUR/USD is trading at 1.3093 as the rally continues. With yesterdays FOMC meeting out of the way, the question now turns to the pace of US growth during Q3. Mr. Bernanke had done what he could do to jumpstart the US economy. Retails sales, consumer confidence and housing should perk up. Hopefully this will be enough. Now traders will once again deal with fundamentals and need for the EU to finish getting their house in order.

Headline risk is high as it relates to the meeting of eurozone finance ministers and central bankers that starts today and moves into the weekend.  The prime issue concerns efforts to beseech Spain’s Prime Minister Mariano Rajoy to apply for aid from the troika.  Spain is resisting pressure to accept significant conditions attached to how it conducts fiscal policy and refuses to have pensioners share in the austerity measures.  Spanish Economy Minister Luis de Guindos has noted that Spain will announcing economic reforms over “coming days” and that he is not prepared to discuss a bond buying program as yet.  The second issue concerns Greece as efforts to enact €11.5 billion in spending cuts encounter resistance but are necessary in seeking the next aid installment.  The troika (ECB, EC and IMF) will be presenting its progress report on Greece today.  These two issues keep European risks very much alive and well despite the ECB’s conditional bond buying program.

There was little action in the European market moves upon amid a very light calendar.  The eurozone posted zero job growth in Q2 after jobs contracted by a slight 0.3% q/q in Q1.  Employment is down 0.6% compared to year-ago levels as strong job markets in Germany mostly net out against weakness in more strained economies.  Eurozone inflation remained at 2.6% y/y on the headline as expected, but core inflation fell to 1.5% y/y and was two-tenths lower than expected.  The eurozone is going through a relative price shock that is posed by high and rising commodity prices that will dampen growth expectations across the continent especially when combined with the euro’s recent appreciation.

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 September 14, 2012 actual v. forecast

Date

 

Currency

 

 

Event

Actual

 

Forecast

 

Previous

Sep. 14

 

JPY

 

 

Industrial Production (MoM) 

-1.0%

 

-1.2% 

 

-1.2% 

 

 

EUR

 

 

CPI (YoY) 

2.6%

 

2.6% 

 

2.6% 

 

 

EUR

 

 

Employment Change (QoQ) 

0.0%

 

-0.2% 

 

-0.2% 

 

 

EUR

 

 

Core CPI (YoY) 

1.5%

 

1.7% 

 

1.7% 

 

 

USD

 

 

Core CPI (MoM) 

0.1%

 

0.2% 

 

0.1% 

 

 

USD

 

 

Core Retail Sales (MoM) 

0.8%

 

0.6% 

 

0.8% 

 

 

USD

 

 

CPI (MoM) 

0.6%

 

0.5% 

 

0.0% 

 

 

CAD

 

 

Manufacturing Sales (MoM) 

-1.50%

 

1.00% 

 

-0.80% 

 

 

USD

 

 

Retail Sales (MoM) 

0.9%

 

0.7% 

 

0.6% 

 

 

USD

 

 

CPI (YoY) 

1.7%

 

1.7% 

 

1.4% 

 

 

USD

 

 

Core CPI (YoY) 

1.9%

 

2.0% 

 

2.1% 

 

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

Date

Time

Currency

 

Event

 

Forecast

Previous

Sep. 18

09:30

GBP

 

CPI (YoY) 

 

 

2.6% 

 

09:30

GBP

 

CPI (MoM) 

 

 

0.1% 

 

10:00

EUR

 

German ZEW Economic Sentiment 

 

-25.5 

-25.5 

Government Bond Auction

Date Time Country 

Sep 17 09:10 Slovakia

Sep 17 10:00 Norway 

Sep 18 08:30 Spain 

Sep 18 09:10 Greece 

Sep 18 09:30 Belgium 

Sep 19 09:10 Sweden 

Sep 19 09:30 Germany 

Sep 19 09:30 Portugal 

Sep 19 10:00 Norway

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About: FX Empire Analyst - Barry Norman

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