EUR/USD Fundamental Analysis December 23, 2013 Forecast

Analysis and Recommendations:

The EUR/USD  gave up 17 points to trade at 1.3645 as the dollar continued to rally after the Fed tapering announcement and an upward revision of US growth for 2014 and 2015. Today data showed another huge jump in US GDP printing at 4.1% against expectations of 3.6%. German PPI declined by 0.1 percent in November as against a drop of 0.2 percent in October. GfK German Consumer Climate rose to 7.6-mark in December from 7.4 level in November.

The euro was down about 0.1 percent against the dollar at $1.3630 after hitting a session low of $1.3625, its lowest since Dec. 5, following a downgrade by Standard & Poor’s of the European Union’s credit rating. It cut the bloc to AA+ from AAA, citing rising tensions in budget negotiations. German Consume Climate climbed from 7.4 to 7.6 points, its best reading since August 2007. On the inflation front, German PPI posted another decline, its fourth in five releases, as inflation indicators in Germany and the eurozone continue to point to weak inflation, despite record low interest rate levels in the eurozone. Germany is the eurozone’s largest economy, and if the region is to shake off weak economic growth and high unemployment, it will need the German locomotive to lead the way.

The dollar is likely to keep benefiting from this, as well as the Fed’s eventual steps to tighten once its tapering is complete. “Combined with solid economic growth, we expect the Fed to begin raising rates in mid-2015, earlier than it currently anticipates,” strategists at Barclays said in a note to clients.

Markets are likely to price in the likelihood of higher US interest rates much sooner, they added, and “the normalization of the US rates curve should add to USD gains.”

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.

Economic Data December 20, 2013 actual v. forecast

 

Upcoming Economic Events that affect the CHF, EUR, GBP, CAD and USD

 

Government Bond Auction

Date Time Country 

There are no major auctions scheduled for Christmas and New Year’s weeks.