EUR/USD Fundamental Forecast– September 15, 2016

The EUR/USD closed at 1.1225, up 0.0008 or 0.07% following a muted reaction to a sharp decline in Euro Zone industrial production. Trader reaction to the report suggests the main focus is on the Fed and its upcoming interest rate decision on September 21.

On Wednesday, Eurostat reported that industrial production was down 1.1% in June compared to a 0.8% increase the month before and the pre-report estimate of minus 0.9%.

A breakdown of the report showed that production of capital goods declined by 1.7%, while energy production was 1.4% lower and durable consumer goods production fell 0.7%. Additionally, the production of intermediate goods was down 0.5% while production of non-durable goods was unchanged.

Looking at the report on an annual basis, industrial production in the Euro Zone was 0.5% lower, which was ahead of analysts’ expectations of a 0.7% drop.

The weakness in the Euro Zone industry was attributed to temporary factors such as a summer shutdown by German automakers in July rather than August this year. Nonetheless, the weak number is likely indicating that there’s a good chance that industrial output will contract over Q3 as a whole.

Traders were ho-hum about the results of the report, instead choosing to focus on the direction of U.S. interest rates. Although the CME FedWatch Indicator shows about a 15% chance of a September Fed rate hike, the price action suggests investors are taking no chances ahead of the interest rate announcement. This is causing a two-sided trade on light volume.

In the absence of major U.S. economic reports today, the EUR/USD is likely to remain rangebound on light volume with trading on both sides of a key pivot at 1.1224.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

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Thursday, September 15, 2016

Government Bond Auctions

Date/Time Country Type

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