EUR/USD Fundamental Analysis June 11, 2012, Forecast

Analysis and Recommendations:

The EUR/USD is down is today’s session trading at 1.2486. After a few days of relief, risk off is the theme. Europe remains a key focus and filled with headline risk; while a slowing in global growth momentum was highlighted today with weak German exports and building fears that Chinese data will disappoint this weekend. News that China has also cut its fuel tax has exacerbated concerns. On the heels of its downgrade of Spain, Fitch warned that the US rating is at risk of a downgrade.

The economic and financial crisis in the euro zone has again intensified with the re-emergence of concerns over Greece exiting the currency union, political tensions and Spanish banking sector stress. Moreover, after a better-than-expected performance in the first quarter (output in the euro area economy was flat on a quarterly basis), the downturn in the region is now expected to be deeper and more protracted. Economists have lowered their growth forecasts for this year and the next to -0.6% and +0.7%, respectively, from -0.5% and +0.9%.The urgency has never been greater for the euro zone to implement a more comprehensive fiscal framework that can complement the monetary union. But the much needed reforms have not kept pace, with the process now compromised by recent political decisions.

Notwithstanding the recent Irish vote in favor of the European Union’s ‘fiscal treaty’ — that is, support for the German-backed and financed approach requiring austerity in exchange for bailout funding — there is much less confidence that a new government in Greece after the second national election on June 17th will support the current ‘euro-in’ bias, not with the country’s living standards being further eroded by the deepening five-year-old recession and soaring unemployment. Nor are there high expectations for the next regional policy summit later this month, now that the focus of governments in France and the Netherlands has changed as well. In the meantime, there is a newfound urgency to recapitalize many of the capital-challenged financial institutions in Greece, Portugal, and now Spain. A more comprehensive safety-net is needed to reduce the contagion that could ripple throughout the financial system and exacerbate the already reduced pace of global activity. 

Funds have shifted from equities and commodities to debt and cash, from the affected countries in the southern euro zone to their neighbors in the north, as well as the U.K., Japan, and the United States. For the time being, these countries where the ‘safe-haven’ status, with the perceived longer-term economic and financial ability to effect meaningful change, both domestically and internationally, even in the face of less than favorable domestic economic performances. 

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 June 8, 2012 actual v. forecast

 

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

Government Bond Auctions

Date  Time  Country 

Jun 11 09:10 Norway

Jun 11 09:10 Slovakia

Jun 11 09:30 Germany

Jun 11 15:30 Italy

Jun 12 08:30 Holland

Jun 12 09:15 Austria

Jun 12 09:30 Belgium

Jun 12 09:30 UK

Jun 12 14:30 UK

Jun 12 17:00 US

Jun 13 09:10 Italy

Jun 13 09:30 Germany

Jun 13 09:30 Swiss

Jun 13 17:00 US

Jun 14 09:10 Italy

Jun 14 09:30 UK

Jun 14 15:00 US

Jun 14 17:00 US