EUR/USD Fundamental Analysis January 10, 2014 Forecast

Analysis and Recommendations:

The EUR/USD gained 29 points in early trading and has held there ahead of Mr. Draghi’s press conference after the BoE and the ECB both held rates and policy today. German data printed on a positive not with industrial production printing higher than expected. Stronger than expected Eurozone economic morale data, which reached its highest in 29 months, also helped to push demand sensitive assets. Euro-area economic confidence increased more than economists forecast in December, buoying up policy makers as they grapple with the legacy of the currency bloc’s longest recession.

The gauge of consumer confidence improved to minus 13.6 from minus 15.4 in November, the commission said. That follows data yesterday that showed retail sales in the euro area increased 1.4 percent in November from a month earlier. Still, the nascent recovery hasn’t led to job creation, with the unemployment rate in the euro area stuck at 12.1 percent since April. European Aeronautic, Defence & Space Co. plans to cut 5,800 jobs in Germany, France, Spain and the U.K., the company said on Dec. 9.

An index of executive and consumer sentiment rose to 100 from a revised 98.4 in November, the European Commission in Brussels said today. That beats the median estimate of 99.1 in a Bloomberg News survey of 24 economists, and is the highest reading since July 2011.

 Investors will look to U.S. non-farm payrolls on Friday for signs of continued recovery in the world’s largest economy, which may bolster speculation over imminent cuts in the Federal Reserve’s commodity-friendly stimulus program. ECB chief Mario Draghi has been at pains to stress in recent months that the bank is prepared to ease its record low interest rates even further below 0.25 percent and test out other, more unconventional, policy options if necessary.  But this year has started strongly for many parts of the euro zone. Germany’s economy is gaining strength and bailed-out Ireland has seen a strong return to borrowing markets, which in turn has lifted Portugal and other ‘periphery’ members.  

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Economic Data January 9, 2014 actual v. forecast

 

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