EUR/USD Weekly Fundamental Analysis July 30 – Aug 3, 2012, Forecast

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Introduction: Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.

The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.

  • The interest rate differential between the European Bank(ECB) and the Federal Reserve(FED)
  • Dollar strength drives EUR/USD lower
  • FED intervention to weaken the dollar the sends EUR/USD higher

 

Weekly Analysis and Recommendation:

The EUR/USD ended the week at 1.2321. The euro had the biggest weekly gain versus the dollar since February as European Central Bank officials and national leaders pledged to support the shared currency amid surging sovereign-bond yields and concern the region’s financial crisis is worsening.

Date

Last

Open

High

Low

Change %

Jul 27, 2012

1.2321

1.2278

1.2390

1.2243

0.35%

Jul 26, 2012

1.2278

1.2139

1.2329

1.2118

1.15%

Jul 25, 2012

1.2139

1.2062

1.2169

1.2054

0.64%

Jul 24, 2012

1.2062

1.2124

1.2138

1.2043

-0.51%

Jul 23, 2012

1.2124

1.2128

1.2145

1.2068

-0.03%

Equities slumped in the first three days of the week amid concern more of Spain’s regions will seek aid, while Moody’s Investors Service lowered outlooks for Germany, the Netherlands and Luxembourg. The S&P 500 then posted the biggest two-day rally since December, surging 3.6 percent, after speculation grew that the European Central Bank would buy bonds to ease borrowing costs for Spain and Italy.

ECB President Mario Draghi will hold talks with Bundesbank President Jens Weidmann in an effort to overcome the biggest stumbling block to a new raft of measures including bond purchases, two central bank officials said on condition of anonymity because the talks are private. German Chancellor Angela Merkel, French President Francois Hollande and Draghi pledged to do everything to protect the euro.

Economic reports showed the U.S. economy expanded at a slower pace in the second quarter as a softening job market prompted Americans to curb spending. Consumer confidence in July dropped to the lowest this year, new home sales unexpectedly fell from a two-year high while orders for equipment slumped.

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 of July 23-27 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

Event 

Actual

Forecast

Previous

Jul 24

EUR

French Flash Manufacturing PMI

43.6

45.6

45.2

 

EUR

French Flash Services PMI

50.2

47.7

47.9

 

EUR

German Flash Manufacturing PMI

43.3

45.3

45.0

 

EUR

German Flash Services PMI

49.7

50.1

49.9

 

EUR

Flash Manufacturing PMI

44.1

45.3

45.1

 

EUR

Flash Services PMI

47.6

47.3

47.1

 

GBP

BBA Mortgage Approvals

26.3K

31.4K

29.6K

 

USD

Flash Manufacturing PMI

51.8

52.1

52.5

Jul 25

EUR

German Ifo Business Climate

103.3

104.8

105.2

 

GBP

Prelim GDP q/q

-0.7%

-0.2%

-0.3%

 

GBP

CBI Industrial Order Expectations

-6

-11

-11

 

EUR

Belgium NBB Business Climate

-11.3

-13.5

-13.2

 

USD

New Home Sales

350K

372K

382K

 

USD

Crude Oil Inventories

2.7M

-0.1M

-0.8M

Jul 26

EUR

GfK German Consumer Climate

5.9

5.9

5.8

 

EUR

M3 Money Supply y/y

3.2%

2.9%

3.1%

 

USD

Core Durable Goods Orders m/m

-1.1%

0.1%

0.8%

 

USD

Unemployment Claims

353K

381K

388K

 

USD

Durable Goods Orders m/m

1.6%

0.4%

1.6%

 

USD

Pending Home Sales m/m

-1.4%

0.6%

5.4%

Jul 27

EUR

German Prelim CPI m/m

0.4%

0.4%

-0.1%

 

CHF

KOF Economic Barometer

1.43

1.24

1.15

 

EUR

Spanish Unemployment Rate

24.6%

24.7%

24.4%

 

USD

Advance GDP q/q

1.5%

1.5%

1.9%

 

USD

Revised UoM Consumer Sentiment

72.3

72.0

72.0

 

 

Economic Highlights of the coming week that affect the Euro, GBP  and CHF

Date

Time

Currency

Event 

Forecast

Previous

Jul 30

30th-31st

GBP

Nationwide HPI m/m

0.8%

-0.6%

 

7:00

EUR

Spanish Flash GDP q/q

 

-0.3%

 

8:30

GBP

Net Lending to Individuals m/m

 

1.3B

 

10:00

GBP

CBI Realized Sales

 

42

 

23:01

GBP

GfK Consumer Confidence

 

-29

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%

 

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About: FX Empire Analyst - Barry Norman

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