EUR/USD Fundamental Analysis October 23, 2014 Forecast

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Updated: Aug 25, 2015, 02:00 UTC

Analysis and Recommendations: The EUR/USD dipped by 26 points to trade at 1.2690 after news came out that the ECB was buying corporate bonds, which the

EUR/USD Fundamental Analysis October 23, 2014 Forecast

Analysis and Recommendations:

The EUR/USD dipped by 26 points to trade at 1.2690 after news came out that the ECB was buying corporate bonds, which the market is viewing as the first step to an all-out easing program. The European Commission will today tell five euro zone countries that their budget plans risk breaching EU rules, which is a first step in the process of rejecting a nation’s budget, the FT reports. Besides France and Italy, similar requests will be sent to Austria, Slovenia and Malta.

After the minutes of the September FOMC meeting, where the Fed suggested that inflation might remain low for longer, today’s US CPI inflation data will probably get extra attention. In September, US CPI inflation is forecast to come out flat on a monthly basis, which should push the annual rate further down from 1.7% Y/Y to 1.6% Y/Y. Downward price pressures were mainly based in commodities, while prices in the services sector are forecast to have increased slightly. Analysts believe that the risks, if there are any, might be for a downward surprise. Core CPI, which excludes food & energy prices, is expected to have picked up by 0.1% M/M, which should lead to a stabilization in the annual rate at 1.7% Y/Y.

The EU Commission will probably take the first step in rejecting some countries budget proposals, as they would risk breaching EU rules. More in particular, according to the FT, the EU would ask for more information about the budgets of France, Italy, Austria, Slovenia and Malta. A decision regarding the rejection of the draft budget needs to be taken before the end of the month. Especially, the French and Italian cases are political sensitive as both countries on either the 3% budget limit or on the trimming of the structural deficit are falling short of EU rules. There is room for compromise, but not much.

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:

Cur.	Event	Actual	Forecast	Previous
JPY	Exports (YoY) (Sep)	6.9%	6.8%	-1.3%
JPY	Trade Balance (Sep)	-958B	-777B	-949B
AUD	CPI (QoQ) (Q3)	0.5%	0.4%	0.5%
AUD	CPI (YoY) (Q3)	2.3%	2.3%	3.0%
GBP	MPC Meeting Minutes
USD	Core CPI (MoM) (Sep)		0.2%	0.0%
USD	CPI (MoM) (Sep)		0.1%	-0.2%
CAD	Retail Sales (MoM)		0.2%	-0.1%
CAD	BoC Monetary Policy
CAD	Interest Rate Decision		1.00%	1.00%

Upcoming Economic Events that you should be monitoring:

Cur.	Event	Actual	Forecast	Previous
AUD	RBA Governor Stevens
NZD	CPI (QoQ) (Q2)		0.5%	0.3%
CNY	HSBC Mfg. PMI		50.2	50.2
EUR	German Mfg PMI		49.5	49.9
EUR	German Services PMI		55.0	55.7
EUR	Manufacturing PMI		49.9	50.3
EUR	Services PMI (Sep)		52.0	52.4
GBP	BBA Mortgage		41.5K	41.6K
GBP	Core Retail Sales (MoM)		-0.2%	0.2%
GBP	Retail Sales (MoM)		-0.1%	0.4%
GBP	CBI Industrial Trends		-4	-4
USD	Initial Jobless Claims		282K	264K