EUR/USD Weekly Fundamental Analysis June 11-15, 2012, Forecast

Get Forex buy/sell signals directly to your email and by SMS.
To learn more click here

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 spent the week on the negative sentiment rollercoaster trading in a range between 1.26 and 1.23, weakened on global risk aversion and safe haven trading. The pair finished the week at 1.2517

Date

Last

Open

High

Low

Change %

Jun 08, 2012

1.2517

1.2568

1.2572

1.2436

-0.41%

Jun 07, 2012

1.2568

1.2576

1.2625

1.2541

-0.07%

Jun 06, 2012

1.2577

1.2461

1.2586

1.2442

0.93%

Jun 05, 2012

1.2461

1.2527

1.2542

1.2411

-0.53%

Jun 04, 2012

1.2527

1.2399

1.2528

1.2386

1.04%

European currency started the week with a rebound against US dollar, as the markets were eagerly waiting for the outcome of the G-7 meeting and the ECB meet. After recovering slightly against the greenback, euro resumed its weak trend as the rating agency, Moody’s downgraded the credit rating of several German and Austrian banks, as the banks are not capable of absorbing the losses. In the meanwhile, we heard the Spanish treasury minister saying that the Spain is facing lot of problems in refinancing its debt and that the country will find it difficult to rescue itself from this situation. Turning towards the G-7 meeting, the ministers and the bankers in the G-7 discussed about the financial and the fiscal union in Europe with major focus being on the Spain and Greece. During all these negative sentiments, currency still rebounded. The ECB officials took a neutral stance and kept the rates unchanged at 1% and postponed the policy changes for the month of July.

Where as in the US, a series of poor data last week (ended 1st June, 2012) in the form of rising unemployment rate and drop in the PMI had prompted the investors to rush towards US treasuries. The weak data made the market participants expect another round of monetary easing by the Fed to support the economy. This week we saw some positive economic data such as rise in the services PMI, encouraging the growth of the economy. Along with that we saw the Unemployment claims of the US falling, thereby reflecting positive signs of the labor market conditions.

Several FOMC members put forth their views regarding the state of the economy and future plans. They showed their readiness to take appropriate actions if the country needs boost at any point in time. Then came the significant speech by the Fed chairman Ben Bernanke, where he preferred to keep the market

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 June 4 – 8 actual v. forecast for Euro, GPB, the Franc, and USD

Date

Currency

 Event

Actual

Forecast

Previous

Jun 5

USD

ISM Non-Manufacturing PMI

53.7

53.6

53.5

GBP

Construction PMI

54.4

54.5

55.8

Jun 6

EUR

Minimum Bid Rate

1.00%

1.00%

1.00%

CHF

Foreign Currency Reserves

303.8B

 

237.6B

Jun 7

CHF

CPI m/m

0.0%

0.1%

0.1%

GBP

Services PMI

53.3

52.6

53.3

EUR

Spanish 10-y Bond Auction

6.04|3.3

 

5.74|2.4

GBP

Asset Purchase Facility

325B

325B

325B

GBP

Official Bank Rate

0.50%

0.50%

0.50%

USD

Unemployment Claims

377K

381K

389K

GBP

PPI Input m/m

-2.5%

-1.2%

-1.4%

Jun 8

USD

Trade Balance

-50.1B

-49.4B

-52.6B

 

Historical:

Highest: 1.5091 USD on Dec 03, 2009.

Average: 1.3709 USD over this period.

Lowest: 1.19 USD on Jun 07, 2010.

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

Date

Time

Currency

 Event

Forecast

Previous

Jun 11

6:45

EUR

French Industrial Production m/m

 

-0.9%

23:01

GBP

RICS House Price Balance

 

-19%

Jun 12

5:45

CHF

SECO Economic Forecasts

  

8:30

GBP

Manufacturing Production m/m

 

0.9%

14:00

GBP

NIESR GDP Estimate

 

0.1%

Jun 13

7:15

CHF

PPI m/m

 

-0.1%

9:00

EUR

Industrial Production m/m

 

-0.3%

Jun 14

7:30

CHF

Libor Rate

<0.25%

<0.25%

7:30

CHF

SNB Monetary Policy Assessment

  

7:30

CHF

SNB Press Conference

  

8:00

CHF

SNB Financial Stability Report

  

8:00

EUR

ECB Monthly Bulletin

  

9:00

EUR

CPI y/y

 

2.4%

Want to read more articles like this one?
Enter your e-mail address and read FX Empire content directly from your inbox.
 
We value your privacy. Your e-mail address will not be shared.
About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

  View all of FX Empire Analyst - Barry Norman's Articles    
Share Your Thoughts: Post a Comment


Your email address will not be published.