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EUR/USD Fundamental Forecast – August 26, 2016

By:
Barry Norman
Published: Aug 25, 2016, 10:44 UTC

The EUR/USD is up 28 points to trade at 1.1292 after the release of Eurozone Ifo data. The dollar weakened ahead of Janet Yellen’s press conference

EUR/USD Fundamental Forecast – August 26, 2016

The EUR/USD is up 28 points to trade at 1.1292 after the release of Eurozone Ifo data. The dollar weakened ahead of Janet Yellen’s press conference tomorrow also a slew of US data due over the next few days including GDP and Durable goods reports.  The dollar was steady on Thursday as investors stayed on the sidelines before the annual global central bankers’ gathering in Jackson Hole, Wyoming, where Federal Reserve Chair Janet Yellen may offer new pointers on US monetary policy.

Recent hawkish statements by Fed officials, including Vice-Chairman Stanley Fischer and New York Fed President William Dudley, have prompted some investors to raise bets that US interest rates will rise sooner rather than later, and some believe Yellen will echo their signals.

The euro has ticked higher as EUR/USD trades slightly below the 1.13 line. On the release front, German Final GDP dropped to 0.4%, edging above the forecast of 0.3%. In the US, Existing Home Sales, with the indicator expected to dip to 5.52 million.

The German economy expanded in the second quarter, but failed to keep up with the first quarter’s pace. Final GDP climbed 0.4%, within expectations but well behind the first quarter gain of 0.7%. Domestic consumption continues to power the economy, with low inflation and zero interest rates helping to spur consumer spending. On Tuesday, there were no surprises from August Eurozone PMI reports, most of which were very close to the estimates. German and Eurozone Manufacturing PMIs both pointed to expansion in the manufacturing sector. As well, both indicators were showed little changed from the July readings, which indicates that manufacturers continue to be optimistic after the Brexit referendum vote. There had been widespread fears that the UK’s shock decision to leave the European Union would send the British and Eurozone economies into a tailspin, but these fears have not borne out by July and August data, which has generally been positive.

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Upcoming Economic Events that you should be monitoring:

August 26, 2016

Country Name Volatility Previous
JPY Tokyo CPI ex Food, Energy (YoY) 2 0.3
JPY Tokyo CPI ex Fresh Food (YoY) 2 -0.4
JPY Tokyo Consumer Price Index (YoY) 2 -0.4
JPY National CPI Ex-Fresh Food (YoY) 2 -0.5
JPY National CPI Ex Food, Energy (YoY) 2 0.4
JPY National Consumer Price Index 2 -0.4
EUR Gfk Consumer Confidence Survey 2 10
GBP GDP (YoY) 2 2.2
GBP GDP (QoQ) 2 0.6
USD GDP Annualized 2 1.2
USD GDP Price Index 2 2.2
USD Personal Consumption (QoQ) 2 1.9
USD Core Personal Consumption (QoQ) 2 1.7
USD Markit PMI Composite 2
USD Baker Hughes US Oil Rig Count 2

Government Bond Auctions

Date Time Country Auction

Aug 24 10:03 Sweden Holds bond auction

Aug 24 10:30 Germany Eur 4bn 0% Oct 2021 Bobl

Aug 24 18:00 US Holds 2yr FRN auction & 5yr note auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon

 

 

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