EUR/USD Weekly Fundamental Analysis – February 1-5, 2016 -Forecast

Weekly Analysis and Recommendation:

The EUR/USD closed the week at 1.0833 after the greenback rallied as traders moved to risk on mode and US stock markets rallied as oil prices gained steadily.  The U.S. economy slowed down in the fourth quarter, pressured by an array of global factors including weakening demand in emerging markets and a strong dollar that makes U.S. exports more expensive.

As demand eased overseas late last year, U.S. companies sought to slash bloated inventories, another factor that caused fourth-quarter GDP to fall to 0.7% growth, in line with analysts’ expectations for a 0.8% gain, but down from a 2% growth rate in the third quarter.

The economy grew 2.4% overall in 2015, the same as in 2014. Excluding inventories and trade, the economy grew at a 1.6% pace in the fourth quarter, the Commerce Department reported on Friday.

The weak first reading of fourth quarter growth heightens concerns that the U.S. economic recovery is once again waning.

“U.S. economic growth slowed sharply in the final quarter of last year, according to the first official estimate. At least some of the weakness looks temporary, but there are also signs that the underlying pace of expansion is on the wane,” said Chris Williamson, chief economist at research firm Markit.

The January jobs report will highlight this week’s economic calendar. While analysts are forecasting another strong month of job creation, much of the focus will be on wage growth. In December, the labor market exceeded expectations by creating 292,000 jobs as the headline unemployment rate held steady at 5%, a seven-and-a-half-year low.

But wages barely rose from a month earlier, a long-running problem that has vexed Federal Reserve policy makers who would like to see higher wages lift prices and inflation upwards toward the Fed’s 2% target. The January report, due to be released by the Labor Department on Friday, is expected to reveal more than 200,000 new jobs were created last month but that wages remained essentially stagnant.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Major Economic Events for the week:

 

Upcoming Government Bond Auctions

Date Time Country 

Feb 02 n/a UK Details of Gilt auctions on Feb 09 & 11

Feb 03 11:03 Sweden Holds bond auction

Feb 03 11:30 Germany EUR 5bn Apr 2021 Bobl

Feb 03 n/a Netherlands Details of DSL auction on Feb 09

Feb 03 n/a US Details of 3 & 10-yr notes on Feb 09/10

Feb 03 n/a US Details of 30-year bond auction on Feb 11

Feb 04 11:50 France Holds bond auction

Feb 04 17:20 Sweden Details of I/L bond auction on Feb 11