EUR/GBP Fundamental Analysis – November 19, 2015 – Forecast

Barry Norman

Analysis and Recommendations:

The EUR/GBP added 13 points as the euro rebounded a bit today after touching its lowest level in months. The pound traded in the green on comments from BoE member Broadbent. The pair is holding at 0.7010. The pound jumped as Bank of England’s Ben Broadbent tells analysts to take the yield curve with a grain of salt.

The warning comes after a major shift in market interest rates – two months ago market rates suggested markets were anticipating the first interest rate hike in eight years coming in spring 2016, but market rates now point to the end of 2016 as the more likely option.

It suggests the bank is trying to play down the significance of the recent shift in interest rate expectations, with the pound rising almost half a cent against the dollar after the warning was issued.

The Bank’s deputy governor for monetary policy, Ben Broadbent, warned that just because the Bank is predicting inflation will return to its two per cent target based on the current expected path of interest rates, it does not mean it endorses market expectations of a rate rise, or the recent shift in market rates.

The euro recovered and adjusted after Tuesdays steady declines. The euro had fallen against the dollar ever since the ECB signaled last month that on Dec. 3 it would further trim interest rates or expand its monetary stimulus, both of which tend to weigh on a currency. At the same time, the Federal Reserve has been pushing the dollar higher by indicating it’s likely to raise rates on Dec. 16 for the first time in nearly a decade.

The euro’s drop is important because it has become a key driver of the moderate upswing in the economy of the 19-country Eurozone.

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 up to the data analysis and information in our weekly reports.

Today’s economic releases:

Cur.

 

Event

Actual

Forecast

Previous

 

  USD

 

FOMC Member Tarullo Speaks  

 

 

 

 

 

  USD

 

API Weekly Crude Oil

-0.482M

1.800M

6.300M

 

 

  AUD

 

RBA Assist Gov Debelle Speaks 

 

 

 

 

 

  AUD

 

Wage Price Index (QoQ) (Q3)

0.6%

0.6%

0.6%

 

 

  USD

 

FOMC Member Lockhart Speaks 

 

 

 

   

 

Upcoming Economic Events that you should be monitoring:

Thursday, November 19, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  NZD

 

PPI Input (QoQ) (Q3)

 

 

-0.3%

 

 

  JPY

 

Adjusted Trade Balance

 

-0.38T

-0.36T

 

 

  JPY

 

Exports (YoY) (Oct)

 

-2.1%

0.6%

 

 

  JPY

 

Trade Balance (Oct)

 

-292B

-115B

 

 

  JPY

 

BoJ Press Conference  

 

 

 

 

 

  EUR

 

German Buba President Weidmann

 

 

 

 

 

  GBP

 

Core Retail Sales (MoM) (Oct)

 

-0.5%

1.7%

 

 

  GBP

 

Core Retail Sales (YoY) (Oct)

 

3.9%

5.9%

 

 

  GBP

 

Retail Sales (MoM) (Oct)

 

-0.5%

1.9%

 

 

  GBP

 

Retail Sales (YoY) (Oct)

 

4.2%

6.5%

 

 

  GBP

 

CBI Industrial Trends Orders (Nov)

 

-10

-18

 

 

  EUR

 

Monetary Policy Meeting  

 

 

 

 

 

  USD

 

Initial Jobless Claims

 

271K

276K

 

 

  USD

 

Philadelphia Fed Manufacturing Index

 

-1.0

-4.5

 

 

  USD

 

Philly Fed Employment (Nov)

 

 

-1.7

 

 

  USD

 

FOMC Member Lockhart Speaks 

 

 

 

   

Government Bond Auctions

Date Time Country

Nov 19 10:30 Spain 0.25% Apr 2018 Bono, 1.15% Jul 2020 Bono, 5.4% Jan 2023

Nov 19 10:50 France Eur 7-8bn; 4.25% Oct 2018 OAT, 0.25% Nov 2020 OAT, 2.25%

Nov 19 11:50 France Eur 1-1.5bn; 0.25% Jul 2024, 1.85% Jul 2027, 3.15% Jul 2032

Nov 19 N/A US Holds 10-year TIPS auction

Nov 20 16:30 Italy Announces details of CTZ/BTPei on 25 Nov

Nov 23 12:00 Belgium Auctions OLOs

Nov 23 N/A US Holds 2-year note auction

Nov 24 17:30 Italy Announces details of BTPs/CCTeu on 27 Nov

Nov 24 N/A Holland Eur 1.0-2.0bn 0.25% Jul 2025 DSL

Nov 24 N/A US Holds 5-year note auction

Nov 25 11:03 Sweden Holds bond auction

Nov 25 11:10 Italy Auctions CTZ/BTPei

Nov 25 11:30 Germany Eur 3bn 1.0% Aug 2025 Bund

Nov 25 N/A US Holds 2-year FRN auction

Nov 25 N/A US Holds 7-year note auction

Nov 26 11:03 Sweden Holds bond auction

Nov 27 11:03 Sweden Holds bond auction

Nov 27 11:10 Italy Auctions BTPs/CCTeus

 

 

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