EUR/USD Weekly Fundamental Analysis October 28 – November 1, 2013 Forecast

Weekly Analysis and Recommendation:

The EUR/USD ended the week over an 8 month high holding the 1.38 price level inflated by the weak US dollar. There was little supportive data from the eurozone and eurozone overall PMI was lackluster. The US dollar continued to weaken as the nonfarm payroll report printed well under expectations and other data was poor throughout the week.  This week traders will be looking at Industrial production (Oct. 28) numbers for September should tick higher by 0.2% m/m with decent prints on manufacturing surveys implying strength while weak automotive sales and a slowdown in the production schedule pose a headwind. Economists are looking for the ISM survey for October to have dropped slightly to a reading of 55 (vs. 56.2 in September) as purchasing manager confidence may have softened surrounding the October government shutdown. The confidence metrics that markets have seen for October ranging from the Philadelphia Fed index to consumer confidence figures have on balance been flat to negative pointing to a softer ISM. Retail sales for September (Oct. 29) could well come in flat or even negative as the ICSC sales index fell, retail gasoline prices fell, and car sales fell. Our forecast is for a 0% m/m print with downside risks. All that said eyes will remain on the FOMC and the ECB this week. German data also was disappointing this week but did not seem to upset traders.  

The ECB will release next week (Wednesday) the October lending survey. This could prove sensitive for expectations on the management of the monetary policy, either from the angle of a potential rate cut or a new LTRO. This will be a very active week for US risks with the FOMC statement on Wednesday, a massive data dump, and key earnings releases. Because we think the Fed will be evaluating incoming data and will wish to get through deferred fiscal policy deadlines, we think it will issue a maintenance statement and that should allow markets to focus upon incoming data and earnings. One possibility in the FOMC statement that will not be accompanied by forecast revisions or a press conference is that the Fed could strengthen forward rate guidance while leaving its bond purchase program unchanged at $85 billion amid no hints of tapering any time soon. This could include lowering the unemployment rate threshold at which a higher fed funds target rate would be considered

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.

Historical: From 2011 to Present

Highest: 1.4577 USD on Jul 03, 2011

Average: 1.3165 USD over this period.

Lowest: 1.2041 USD on Jul 24, 2012

Major Economic Events for the week of October 21 -25 actual v. forecast for Euro, GPB, and USD

 

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

Government Bond Auction

Date Time Country 

Oct 28 10:10 Italy

Oct 28 10:30 Germany

Oct 28 11:00 Belgium

Oct 28 18:00 US

Oct 29 01:30 Japan

Oct 29 10:10 Italy

Oct 29 10:10 Norway

Oct 29 15:30 UK

Oct 29 18:00 US

Oct 30 10:10 Italy

Oct 30 10:10 Sweden

Oct 30 10:30 Germany

Oct 30 18:00 US