EUR/USD Forecast Dec. 13, 2011, Fundamental Analysis
We can surely say that the downside pressure will likely prevail and that is what the market feared last week, how rating agencies will accept the news, especially after S&P warned the nations and now Moody’s followed.
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The Italian and French debt auctions went well with a slight drop in yields at the auction and good demand yet still was offset by prevailing pressure and rising yields on the benchmark 10-year bonds in the region, especially for Spain that again rose above 6.0%.
We still see downside pressure extending on the euro in the coming days as now investors saw the majority see the summit not a major breakthrough and the slight relief the fiscal pact produced now faded.
On Tuesday the aftermath of the summit will still be evident yet the main highlight will be the FOMC decision and whether the Feds will hint for anything new that might ease the woes and pressure the dollar lower to help ease the selloff and support the sentiment.
Germany will start the session at 10:00 GMT with the ZEW Survey for December, where the current situation previous reading was 34.2, while the economic sentiment is expected to improve slightly to -55.0 from the previous -55.2.
The euro zone will also provide ZEW survey for the economic sentiment for December, where the previous reading was -59.1.
The United States will join the session at 13:30 GMT with the retail sales index for November, where the advance retail sales index could have expanded by 0.6% from 0.5%, while the retail sales less Autos index could have advanced by 0.5% from 0.6%.
At 15:00 GMT the United States will provide the business inventories index for October, which could have improved 0.4% from the previous steady reading.
At 19:15 GMT the Federal Open Market Committee (FOMC) will announce the rate decision (DEC 13), with expectations the Federal Bank could have left rates unchanged at 0.25%.