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EUR/USD Fundamental Forecast – July 29. 2016

By:
Barry Norman
Published: Jul 28, 2016, 12:49 UTC

The EUR/USD edged up by 29 points as the US dollar gave back gains after the shift in tone by the Federal Reserve on Wednesday afternoon. There has been a

EUR/USD Fundamental Forecast – July 29. 2016

The EUR/USD edged up by 29 points as the US dollar gave back gains after the shift in tone by the Federal Reserve on Wednesday afternoon. There has been a lack of data and headlines today as traders stay glues to the US election cycle. The major events in the marketplace this week are central bank meetings in the U.S. and Japan. With the FOMC meeting just concluded, attention turns to the Bank of Japan meeting Thursday and Friday. It is expected the BOJ will announce some sort of a new monetary policy stimulus package. A Japanese newspaper reported Tuesday that any announced BOJ stimulus package will not be an aggressive one. Another Japanese newspaper report Wednesday said upcoming monetary policy stimulus will indeed be robust.

A gauge of the greenback fell for a third day as traders saw only a 26 per cent chance of a US interest rate increase in September, after the Fed gave little hint of an imminent move. Japan’s currency resumed gains after dropping on Wednesday when Prime Minister Shinzo Abe announced a 28 trillion yen ($267 billion) fiscal-stimulus package.

“We’re seeing broad dollar weakness,” said Yuji Kameoka, the chief foreign-exchange strategist at Daiwa Securities Co. in Tokyo. “Even though the Fed did note some improvements in the economy, a rate hike in September still isn’t certain.”

Almost 80 per cent of analysts surveyed by Bloomberg forecast Governor Haruhiko Kuroda and his board will expand the record program at their two-day meeting starting Thursday. The yen has surged almost 15 per cent versus the greenback this year, outperforming its developed-market peers, as concern the global economy is slowing spurs demand for safer assets and counteracts the central bank’s currency-weakening stimulus.

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Upcoming Economic Events that you should be monitoring:

Friday, July 29, 2016

Currency Name Volatility Previous Consensus
JPY BoJ Interest Rate Decision 3 -0.1 -0.2
JPY BoJ Monetary Policy Statement 3
EUR Gross Domestic Product YoY) 3 1.7 1.6
EUR Gross Domestic Product (QoQ) 3 0.6 0.3
EUR Consumer Price Index (YoY) 3 0.1
EUR Consumer Price Index – Core (YoY) 3 0.9

Government Bond Auctions

Date/Time Country Type

Jul 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jul 28 11:10 Italy Holds bond auction

 

 

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