EUR/USD Fundamental Forecast – September 14, 2016

The EUR/USD dipped 6 points as the greenback rallied and lower Eurozone economic sentiment weighed on the currency. Mario Draghi did little to spark volatility. Last Thursday, Mario Draghi was unable to move the capital and money markets with his customary monetary policy Press conference in Frankfurt am Main. On the contrary, North Korea’s leader Kim Jong-un, a global castoff, did it the next day just by pressing a button. As it turns out, the ECB seems to recognize the worsening of the global scenery, but appears unwilling to take more vigorous action in support of the ailing Eurozone. Draghi indirectly said that when he stated “our baseline scenario remains subject to downside risks”. Yet, he refused to take action now. The euro area’s central bank is still seemingly under the strong influence of the German financial orthodoxy, rejecting the use of more effective monetary measures to overcome stagnation and prepare for the next rainy day.

Draghi’s comments come three days before an EU summit in Bratislava, Slovakia, to discuss the future of the continental project, which has been roiled by youth unemployment, a refugee influx, growing support for populist parties and the U.K.’s vote to quit the bloc. Leaders have pledged to focus on the issues that most concern the union’s 500 million citizens, such as terrorism, migration and the consequences of globalization.

European Commission President Jean-Claude Juncker will speak to the EU Parliament in Strasbourg on Wednesday in his annual “State of the Union” speech. He intends to outline policy areas ranging from defense to investment.

The ECB head, who won’t attend the Bratislava summit, has stepped up his calls in recent months for governments to deliver structural reforms and complete the institutional set up of the euro area.

In his speech, Draghi said unresolved internal divisions such as a failure to complete the economic and monetary union pose a “real danger” in Europe.

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Upcoming Economic Events that you should be monitoring:

 September 14, 2016

Government Bond Auctions

Date Time Country Auction

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