By FXEmpire.com
Analysis and Recommendations:
The EUR/USD is trading at 1.3233 having retraced Friday’s gains, at the close of the European session down 0.2%, but still trading above 1.32. European bond yields are generally stable and EUR volatility is trading near its lows at 8.4. News flow has generally been negative, with Spain entering a recession (GDP came in at -0.3% in Q1), S&P downgrading 11 banks and the March central bank data revealing a lack of foreign demand for Spanish debt.
As expected, S&P has downgraded 11 Spanish banks and put a further 6 on watch; while taking the opposite tact, Moody’s has announced that it views Spain’s new fiscal measures as credit positive. Meanwhile, in March Spanish banks bought EUR20bn in sovereign bonds, with foreign holdings falling from EUR245bn to EUR220bn. On a brighter note for EUR, the flash Eurozone CPI came in stronger than expected at 2.6% and unchanged from March, suggesting that inflationary pressures are failing to fall, even as the outlook for the economy deteriorates.
This will prove a complication for the ECB, as it will limit the central bank’s ability to cut interest rates. The balance between growth and austerity is increasingly complicated with political uncertainty rising on the back of it. In addition, as growth has disappointed there is increasing recognition that austerity cannot be the sole focus. Today there are rumors that the European Commission is planning to announce a new funding program aimed directly at growth. The resiliency of EUR is impressive.
Economic Data for April 30, 2012 actual v. forecast
|
KRW |
South Korean Industrial Production (MoM) |
-3.1% |
0.2% |
0.6% |
|
AUD |
HIA New Home Sales (MoM) |
-9.4% |
3.0% |
|
|
EUR |
CPI (YoY) |
2.6% |
2.5% |
2.6% |
|
EUR |
Greek Retail Sales (YoY) |
-13.00% |
-10.60% |
|
|
USD |
Core PCE Price Index (MoM) |
0.2% |
0.2% |
0.1% |
|
GDP (MoM) |
-0.2% |
0.2% |
0.1% |
|
|
USD |
Personal Spending (MoM) |
0.3% |
0.4% |
0.9% |
|
USD |
Chicago PMI |
61.0 |
62.2 |
Economic Events for the European and US Markets
15:00 USD ISM Manufacturing Index 53.5 53.4
The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) rates the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The data is compiled from a survey of approximately 400 purchasing managers in the manufacturing industry. On the index, a level above 50.0 indicates industry expansion, below indicates contraction.
Government Bond Auctions (this week)
Date Time Country
May 01 09:30 UK
May 02 09:10 Sweden
May 02 09:30 Portugal
May 02 13:00 US
May 03 08:30 Spain
May 03 08:50 France
May 03 09:10 Sweden
May 03 09:30 UK
May 08 09:15 Austria
May 08 09:30 Belgium
May 08 14:30 UK
May 08 15:30 Italy
May 08 17:00 US
May 09 09:10 Sweden
May 09 09:30 Germany
May 09 09:30 Swiss
May 09 09:30 UK
May 09 14:30 Sweden
May 09 15:30 Italy
May 09 17:00 US
May 10 15:00 US
May 10 17:00 US
May 11 09:10 Italy BOT auction
May 11 10:00 Belgium
Click here a current EUR/USD Chart.
Originally posted here
