EUR/USD Fundamental Analysis October 21, 2014 Forecast

Analysis and Recommendations:

The EUR/USD fell by 3 points to trade at 1.2576 after a mix of data hit the markets today. There were no significant releases as the pair moved between small gains and losses. The dollar gained on Monday after upbeat data restored some calm to the financial markets, prompting equities to rally back from deep losses and triggering a rise in Treasury yields. On Friday, data showed U.S. consumer sentiment come in stronger than expected, restoring some faith in the U.S. economy and calming nerves after a week that saw Wall Street buffeted and Treasury yields fall sharply on global growth concerns.

Taking tips from Friday’s rebound on Wall Street, Tokyo’s Nikkei, which hit a five-month bottom on Friday, surged 2.6 percent.

Economic data from the eurozone printed on a negative note last week. The German Wholesale Price Index (WPI) rose around 0.1 percent in September from an earlier decline of 0.2 percent in August. While German ZEW Economic Sentiment dropped to a negative territory of 3.6-level in October from 6.9-mark in September and Industrial Production plunged by 1.8 percent in August with respect to rise of 0.9 percent a month ago. The all-important ZEW Economic Sentiment fell by 10.1 points to 4.1-mark in October when compared to 14.2-level in September.

Italian Trade Balance was at a surplus of 2.06 billion Euros in August as against an earlier surplus of 6.92 billion Euros a month ago. Final Consumer Price Index (CPI) remained unchanged at 0.3 percent in September. Final Core CPI grew by 0.8 percent in September from 0.7 percent in August. The eurozone trade balance was at a surplus of 15.8 billion Euros in August with respect to 12.7 billion euros in prior month.

European Central Bank policy makers said governments must accelerate plans to strengthen their economies or risk derailing the region’s recovery. “Talking vaguely about structural reforms, but not doing them, is the worst of all worlds,” Executive Board member Benoit Coeure said today in Riga. “It creates uncertainty over the path of real interest rates, without in tandem raising expectations of future growth.”

While Coeure said a program to purchase covered bonds will start within days, pressure is mounting on the ECB to also buy sovereign bonds as the 18-nation euro area struggles to recover from a debt crisis and recession.

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.

Today’s economic releases actual vs. forecast:

 

Upcoming Economic Events that you should be monitoring:

Government Bond Auction

Date Time Country Auction

Oct 21 10:30 Spain 3 & 9M T-bill auction

Oct 21 11:00 Finland Maximum Eur 1bn 2.75% Jul 2028 bonds

Oct 21 11:00 Norway Nok 3bn 3% Mar 2024 bonds

Oct 21 11:00 UK GBP 3bn 2.75% Sep 2024 Gilt

Oct 21 12:30 ESM Up to Eur 1bn 6M T-bills (Apr 2015)

Oct 22 11:30 Germany Eur 2.0bn 2.5% Aug 2046 Bund

Oct 23 11:03 Sweden Sek 1bn 0.5% Jun 2017 I/L bond

Oct 23 17:00 US Announces 2/5/7Y Note & 2Y FRN auctions on Oct 28/29/30

Oct 23 17:30 Italy Announces details of BTPei/CTZ auctions on Oct 28

Oct 23 19:00 US USD 7bn 30Y TIPS auction

Oct 24 17:30 Italy Announces details of BOT auction on Oct 29

Oct 27 12:30 Germany Eur 2.0bn new 12M Bubill (Oct 2015) auction

Oct 27 18:30 Italy Announces details of BTP/CCTeu auctions on Oct 30

Oct 27 12:10 Italy BTPei/CTZ auctions

Oct 28 12:10 Italy BOT auction

Oct 28 19:00 US 2Y Note auction

Oct 29 12:03 Sweden Bond auction

Oct 29 12:30 Germany Eur 4.0bn Aug 2024 Bund auction

Oct 29 17:30 US 2Y FRN auction

Oct 29 19:00 US 5Y Note auction

Oct 30 12:10 Italy BTP/CCTeu auctions

Oct 30 19:00 US 7Y Note auction