EUR/USD Fundamental Analysis March 29, 2012, Forecast

Analysis and Recommendations:

The EUR/USD collapsed today, falling from the high of 1.3372 to end the day at 1.3306. The pair traded in a tight range hanging close to the 1.33 level. It was a day of mixed signals from Europe, with several economic reports above and below forecast. French GDP came in as expected at 0.2% and German CPI held at 0.3%. In the US the Durable Goods report was up, but not as high as expected by economists. It was overall a positive report, showing increases in almost all sectors.

 Euro area countries are strongly considering paying cash into the currency union’s firewall faster in order to raise its ability to lend money to countries in trouble, a senior European Union official said Wednesday.

The flight from the euro was a flight to safety, after more worries began to surface for Spain. In a report published today,” The risk of a Spanish debt restructuring is higher now than it’s been since the beginning of the crisis”, said Citigroup Inc. chief economist William Buiter. “Spain looks likely to enter some form of a troika program this year, as a condition for further European Central Bank support for the Spanish sovereign and/or Spanish banks,” said the former Bank of England Monetary Policy Committee member. A week ago, Buiter told Bloomberg TV that he was increasingly worried about a default for Spain.

 Italian Prime Minister Mario Monti reportedly said Wednesday that there was little euro-zone contagion risk from Spain’s deficit worries, and that that country is on a “steady course of budget consolidation.”

Commodities fell today as crude oil and gold feel from their perch.

Economic Data March 28, 2012 actual v. forecast

 

Economic Reports for March 29, 2012 Europe and Americas

08:55     EUR       German Unemployment Rate                     6.8%      6.8%    

The German unemployment rate measures the percentage of the total work force that is unemployed and actively seeking employment during the reported month.           

08:55     EUR       German Unemployment Change               -10K       0K

German Unemployment Change measures the change in the number of unemployed people during the previous month.

13:30     USD      Initial Jobless Claims                                   350K       348K      

13:30     USD      Continuing Jobless Claims                         3365K     3352K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.             

13:30     USD      GDP Price Index (QoQ)                                  0.9%      0.9%

The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product. It is the broadest inflationary indicator.                             

13:30     USD      GDP (QoQ)                                                        3.0%       3.0%    

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

17:45     USD      Fed Chairman Bernanke Speaks

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to speak. As head of the Fed, which controls short term interest rates, he has more influence over the U.S. dollar’s value than any other person. Traders closely watch his speeches as they are often used to drop hints regarding future monetary policy.                                                                       

 

Government Bond Auctions (this week)

Mar 29   00:30  Japan  Auctions 2Y JGBs

Mar 29  09:10  Italy   BTP/CCTeu auction

Mar 29  17:00  US  Usd 29.0bn 7Y Notes

Mar 30  14:30  UK  Publication of the DMO Q2 Gilt operations calendar

Mar 31  n/a  Spain  IGCP deadline for Q2 T-bill issuance programme

Apr 03  09:30  Belgium  Auctions 3 & 6M T-bills

Apr 03  09:30  UK  Conventional Gilt Auction

Apr 04  08:30  Spain  Bono auction

Apr 04  14:30  Sweden  Details T-bill auction on Apr 11

Apr 05  08:50  France  OAT auction

Apr 05  15:00  US Announces auctions 

Apr 05  15:30  Italy   Details BOT on Apr 11 & BTP/CCTeu on Apr 12