EUR/USD Fundamental Analysis October 22, 2014 Forecast

Analysis and Recommendations:

The EUR/USD  dipped 52 points to trade at 1.2748 falling as the US dollar recovered but on worries of a decline in the German economy after the central bank lowered Germany’s growth outlook.  The dollar held declines from yesterday against a majority of its major peers as traders speculated a slowdown in global growth will delay the timing of a Federal Reserve interest-rate increase.

Mario Draghi, the European Central Bank president, indicated in September that the latest measures to boost faltering eurozone inflation and get the economy moving again could increase the ECB’s balance sheet up by to €1 trillion. As has become clear through banks’ relatively low desire to take up new ECB liquidity facilities, as well as the only limited volumes of asset-backed securities and covered bonds available for ECB purchases, the actual balance sheet increase will be much less than €1 trillion. The total stock of covered bonds that meet the ECB’s requirements is only €600 billion, from a stock of €1.2 trillion; purchasable ABS assets are only €400 billion out of a stock of €690 billion. It is not likely that the ECB can buy them all. There is no data in the eurozone today.

The euro fell more than half a cent against the dollar on Tuesday after Reuters reported the European Central Bank was looking at buying corporate bonds as soon as December in its efforts to revive the euro zone economy.

The move, if realized, would widen out the private-sector asset-buying program the ECB began on Monday, adding to the number of new euros the bank can put into circulation without politically controversial purchases of government bonds.

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:

There was no European data today.

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