EUR/USD Fundamental Forecast – September 12, 2016

The EUR/USD continued its Draghi inspired rally after the ECB made no actions yesterday. Draghi said that a change to the QE situation was not a topic of discussion. The euro is trading at 1.1268.  The euro maintained its upward trend against other most major currencies on Friday after the European Central Bank kept its monetary policy unchanged on Thursday.

For the first time in more than two years, ECB President Mario Draghi neither announced new stimulus measures nor signaled they were in the pipeline after the bank’s decision to maintain its current bond-buying policy.

An easy policy environment is expected to continue for now, but recent gains in commodity prices and inflation expectations may persuade ECB officials to scale back its stimulus program — the process known as tapering — in the longer run, some analysts say.

The ECB’s stance wasn’t entirely unexpected given the relative strength of recent economic data. Nevertheless, some economists reckon that the ECB will still have to extend its asset purchases for at least six months beyond the current March deadline.

“We think that it will need to announce further policy stimulus before long,” writes Jennifer McKeown, senior European economist at Capital Economics, pointing not only to the likely continued weakness in growth and in inflation pressures but to the negative impact that the recent rise in the euro itself will have on the region.

“Clearly, markets expected more action or, at least, clearer signals from the ECB on additional stimulus measures,” writes the economics team at Lloyds Bank Commercial Banking.

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Upcoming Economic Events that you should be monitoring:

 September 12, 2016

Government Bond Auctions

Date Time Country Auction

Sep 12 11:30 Germany Eur 2bn Mar 2017 Bubill

Sep 12 13:00 Norway Details of bond auction on Sep 14

Sep 13 11:00 Netherlands Eur 2-3bn 0% Jan 2022 DSL

Sep 13 11:10 Italy Holds bond auction

Sep 14 11:05 Norway Holds bond auction

Sep 14 11:30 UK 0.125% 2046 I/L Gilt

Sep 14 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

Sep 15 10:30 Spain Holds bond auction

Sep 15 11:03 Sweden Holds I/L bond auction

Sep 15 11:50 France Holds bond auction