EUR/USD Weekly Fundamental Analysis December 17-21, 2012, Forecast

Weekly Analysis and Recommendation:

The EUR/USD climbed breaking recent highs hitting 1.3174 and closing at 1.3162 after traders absorbed the huge stimulus package introduced by the FOMC and a change to guidance and policy. The FOMC’s new easing measures had muted market reception. This is not the sort of thing you want for a policy that is supposed to work by changing peoples’ expectations about risk and return, inducing them to move into riskier assets, and ultimately prompting people in the real world to use that lower cost of capital to start new projects and hire more people. Stocks were about 0.2% stronger on Wednesday before the announcement, rallied another 0.4% afterward, which is fairly inconsequential relative to the size of the Fed’s program, and then declined back to unchanged by the close. Bonds sold off and the curve steepened, in a signal of investor concerns about the increased long-run inflation uncertainty from the Fed’s experimental policies. Bonds held those losses into the close, despite the equity reversal.  The greenback remains weak as traders focus now on the US Fiscal Dilemma, having to deal quickly with tax increases and budget cuts that will automatically take place on Jan 1, 2013 unless US lawmakers can reach agreements for a balanced budget and a cut to the US deficit.

While in euro Greece completed its required bond buyback which was the final step in order to receive funds from the EU, which has now confirmed that a payment will be issued this month, relieving market tensions. Also EU Ministers approved the final plan for a Banking Supervisor. All positive steps for the EU.

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 of December 10-14 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 17 10:10 Norway 

Dec 17 18:00 US 

Dec 18 01:30 Japan 

Dec 18 09:30 Spain 

Dec 18 10:10 Greece 

Dec 18 18:00 US 

Dec 19 18:00 US 

Dec 20 10:30 UK 

Dec 20 16:30 Italy  

Dec 20 18:00 US 

Dec 21 16:30 Italy