EUR/USD Weekly Fundamental Analysis December 10 – 14, 2012, Forecast

Weekly Analysis and Recommendation:

The EUR/USD ended the week at 1.2927 falling from the high just a few days ago of 1.3127. The euro had been trading in positive territory after Greece seemed to be all set financially and eco data seemed to perk up. The eurozone remained in recession with GDP at -0.1% but positive sentiment was supporting the euro, as US lawmakers continued to make headlines over the debates to resolve the fiscal problems facing the US with the Jan 1, deadline.

US data remained in positive territory. All seemed positive until Mr. Draghi from the ECB kicked off the day Thursday. The ECB held rates and policy as expected. Mr. Draghi later gave his statement and held his press conference, where he dropped the bomb. Draghi seems to have a way of making markets crazy when he speaks, much like Mr. Bernanke in the US.

After giving a fairly negative assessment of the eurozone economy, the ECB lowered GDP forecasts for the eurozone, as expected, what caught markets off guard was the depth and the length of the downgrades. The ECB does not see the EU turning around until sometime in 2014. This was followed on Friday by the Bundesbank lowering its 2013 GDP forecast from 1.6% to 0.4%, adding to downward pressure on the EUR after the ECB meeting, where President Draghi confirmed that the council discussed interest rate cuts and the implications of negative interest rates; however the most dramatic reaction was around the discussion of the SSM (the banking union), which to us highlights the vulnerability of euro to developments on the banking union front

Friday also saw the US nonfarm payroll print well above market expectations, with the US unemployment falling to 7.7% and a big jump above estimates in job creation. The US dollar gained momentum and the euro continued to tumble.

This week will be all about the FOMC and whether we will see additional QE now or after the first of the year. Traders now think that with the positive jobs report that Mr. Bernanke will postpone any decisions until after US lawmakers have resolved their fiscal dilemma.

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 and we provide daily updates and outlooks.

Major Economic Events for the week actual v. forecast for Euro, GPB, the Franc, and USD

Historical: From 2010 to Present

Highest: 1.4940 USD on May 04, 2011.

Average: 1.3434 USD over this period.

Lowest: 1.1877 USD on Jun 07, 2010.

 

Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD

Government Bond Auction

Date Time Country 

Dec 10 10:10 Norway 

Dec 10 10:10 Slovakia 

Dec 10 15:30 UK 

Dec 10 16:30 Italy  

Dec 11 09:30 Spain 

Dec 11 10:10 Greece 

Dec 11 10:15 Austria 

Dec 11 10:30 Belgium 

Dec 11 10:30 UK 

Dec 11 18:00 US 

Dec 12 10:10 Italy  

Dec 12 10:10 Sweden 

Dec 12 10:30 Swiss 

Dec 12 16:30 US 

Dec 13 01:30 Japan 

Dec 13 09:30 Spain 

Dec 13 10:10 Italy  

Dec 13 10:30 UK 

Dec 13 16:00 US 

Dec 13 18:00 US 

Dec 14 11:00 Belgium 

Dec 14 15:30 UK