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EUR/USD Weekly Fundamental Analysis, August 17 – August 21, 2015 Forecast

James Hyerczyk
Weekly EUR/USD
Weekly EUR/USD

Weekly Analysis and Recommendations:

The EUR/USD posted a strong gain last week, fueled by oversold technical factors and an intervention by China after the People’s Bank of China devalued the Yuan three times last week. Also contributing to the weakness were comments from Federal Reserve vice chairman Stanley Fischer who said early last week that low inflation may prevent the Fed from raising interest rates in September. 

U.S. economic reports will dominate the markets this week. On Monday, traders will get the opportunity to react to the latest Empire State Manufacturing Index. This report should be considered a leading indicator of economic activity. It is expected to show a reading of 5.0 versus a previous reading of 3.9. 

On Tuesday, the focus will be on the U.S. housing industry. Traders are looking for building permits issued in July to edge higher by 1.21 million units. In June, they were up about 7.4% to 1.34 million units. This was its highest level since 2007. Builder confidence is growing indicating that the housing market should continue to improve in the coming months. Housing starts are expected to show a gain of 1.20 million units. 

Wednesday could produce the most volatile reactions to reports with the release of the U.S. consumer inflation report and the latest Fed minutes. U.S. consumer inflation is expected to show an increase of 0.2%. In June, it showed a reading of 0.3%. Lower energy prices are being blamed for the decline. This report is important because it is a major component in the Fed’s decision process as to whether to raise rates in September or refrain. The Fed minutes are expected to reveal how wide the gaps are between the hawks and the doves, and how real a September rate hike is. 

Thursday’s session features more U.S. data with traders turning their attention to weekly unemployment claims, the Philly Fed Manufacturing index and Existing Home Sales. 

Friday’s session features Euro zone Flash Manufacturing and Services PMI data as well as U.S. Flash Manufacturing PMI data. 

Look for increased volatility on Wednesday. A lower than expected U.S. consumer inflation number is likely to be bullish for the EUR/USD. If the guidance in the Fed minutes favors the doves then look for this news to support the EUR/USD also. Because of China’s devaluation activity last week, more traders are now looking for the Fed to take a pass on a September rate hike. This could also underpin the Euro. 

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 recent analysis and information in our weekly reports. 

Weekly EUR/USD

Reports to Watch This Week: 

           Date                        Time               Curr                                  Event                                                        Forecast   Previous

Mon Aug 17

 8:30am ET

USD

 

Empire State Manufacturing Index

   

5.0

3.9

 

Tue Aug 18

8:30am ET

USD

 

Building Permits

   

1.21M

1.34M

 
   

USD

 

Housing Starts

   

1.20M

1.17M

 

Wed Aug 19

8:30am ET

USD

 

CPI m/m

   

0.2%

0.3%

 
   

USD

 

Core CPI m/m

   

0.2%

0.2%

 
 

10:30am ET

USD

 

Crude Oil Inventories

     

-1.7M

 
 

2:00pm ET

USD

 

FOMC Meeting Minutes

         

Thu Aug 20

2:45am ET

USD

 

FOMC Member Williams Speaks

         
 

8:30am ET

USD

 

Unemployment Claims

   

272K

274K

 
 

10:00am ET

USD

 

Philly Fed Manufacturing Index

   

7.2

5.7

 
   

USD

 

Existing Home Sales

   

5.45M

5.49M

 

Fri Aug 21

3:00am ET

EUR

 

French Flash Manufacturing PMI

     

49.6

 
   

EUR

 

French Flash Services PMI

     

52.0

 
 

3:30am ET

EUR

 

German Flash Manufacturing PMI

     

51.8

 
   

EUR

 

German Flash Services PMI

     

53.8

 
 

4:00am ET

EUR

 

Flash Manufacturing PMI

     

52.4

 
   

EUR

 

Flash Services PMI

     

54.0

 
 

9:45am ET

USD

 

Flash Manufacturing PMI

   

53.5

53.8

 

 

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