By FXEmpire.com
Introduction: Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.
The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.
- The interest rate differential between the European Bank(ECB) and the Federal Reserve(FED)
- Dollar strength drives EUR/USD lower
- FED intervention to weaken the dollar the sends EUR/USD higher
Weekly Analysis and Recommendation:
The EUR/USD faced a difficult week. The week opened with anticipation of news during Chairman Bernanke’s two days of testimony before Congress. As soon as his prepared statement was released markets realized that Mr. Bernanke was going to hold to the June FOMC statement and offer nothing else.
Market focus turned to Spain and Italy and a bit of Greece, with finance costs soaring Spain came hat in hand to the EU asking for more funds.
In German, a different side of this story was unfolding; the German Constitutional Court took up the matter of the legality of the ESM throwing a wrench in the plans to fund bailouts through the ESM. The court eventually released the date of September 12 for its decision, holding the EU without plans until its ruling.
|
Date |
Open |
High |
Low |
Change % |
|
|
Jul 20, 2012 |
1.2156 |
1.2276 |
1.2283 |
1.2145 |
-0.99% |
|
Jul 19, 2012 |
1.2277 |
1.2277 |
1.2323 |
1.2230 |
0.00% |
|
Jul 18, 2012 |
1.2277 |
1.2296 |
1.2306 |
1.2217 |
-0.15% |
|
Jul 17, 2012 |
1.2295 |
1.2266 |
1.2316 |
1.2189 |
0.24% |
|
Jul 16, 2012 |
1.2266 |
1.2247 |
1.2290 |
1.2176 |
0.16% |
Problems continued to compound after Chancellor Merkel made statements that she was not sure if the EU could survive. By the end of the week all hopes in the EU were dashed. Investors pulled from equities, commodities and currencies associated with the EU. Moving out to a broad array of markets and assets just away from the EU.
The US dollar returned to being strong by the end of the week supported by outstanding earnings reports which overcame negative eco data as investors once again heard the call for stimulus in the far off distance.
The top four risks to watch next week by way of factors that could impact the global market tone include Q2 US GDP on Friday, Chinese and European manufacturing data, fiscal progress reports out of beleaguered Greece and Portugal, and a continuation of the US Q2 earnings season.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthlyanalysis 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 July 16 – 20 actual v. forecast for Euro, GPB, the Franc, and USD
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jul 16 |
EUR |
Core CPI y/y |
1.6% |
1.6% |
1.6% |
|
USD |
Core Retail Sales m/m |
-0.4% |
0.1% |
-0.4% |
|
|
USD |
Empire State Manufacturing Index |
7.4 |
3.9 |
2.3 |
|
|
Jul 17 |
GBP |
CPI y/y |
2.4% |
2.8% |
2.8% |
|
GBP |
RPI y/y |
2.8% |
3.0% |
3.1% |
|
|
EUR |
German ZEW Economic Sentiment |
-19.6 |
-17.3 |
-16.9 |
|
|
USD |
Core CPI m/m |
0.2% |
0.2% |
0.2% |
|
|
USD |
TIC Long-Term Purchases |
55.0B |
45.7B |
27.2B |
|
|
USD |
Capacity Utilization Rate |
78.9% |
79.2% |
78.7% |
|
|
USD |
Industrial Production m/m |
0.4% |
0.4% |
-0.2% |
|
|
Jul 18 |
GBP |
Claimant Count Change |
6.1K |
6.2K |
6.9K |
|
GBP |
Unemployment Rate |
8.1% |
8.2% |
8.2% |
|
|
CHF |
ZEW Economic Expectations |
-42.5 |
-43.4 |
||
|
USD |
Building Permits |
0.76M |
0.77M |
0.78M |
|
|
USD |
Housing Starts |
0.76M |
0.74M |
0.71M |
|
|
USD |
Crude Oil Inventories |
-0.8M |
0.5M |
-4.7M |
|
|
Jul 19 |
CHF |
Trade Balance |
2.25B |
2.21B |
2.52B |
|
EUR |
Current Account |
10.9B |
5.3B |
5.5B |
|
|
GBP |
Retail Sales m/m |
0.1% |
0.6% |
1.5% |
|
|
USD |
Unemployment Claims |
386K |
367K |
352K |
|
|
USD |
Existing Home Sales |
4.37M |
4.64M |
4.62M |
|
|
USD |
Philly Fed Manufacturing Index |
-12.9 |
-7.9 |
-16.6 |
|
|
Jul 20 |
EUR |
German PPI m/m |
-0.4% |
-0.2% |
-0.3% |
|
GBP |
Public Sector Net Borrowing |
12.1B |
11.8B |
16.1B |
Historical:
Highest: 1.5091 USD on Dec 03, 2009.
Average: 1.3709 USD over this period.
Lowest: 1.19 USD on Jun 07, 2010.
Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD
|
Date |
Time |
Currency |
Event |
Previous |
|
Jul 24 |
7:00 |
EUR |
French Flash Manufacturing PMI |
45.2 |
|
7:00 |
EUR |
French Flash Services PMI |
47.9 |
|
|
7:30 |
EUR |
German Flash Manufacturing PMI |
45.0 |
|
|
7:30 |
EUR |
German Flash Services PMI |
49.9 |
|
|
8:00 |
EUR |
Flash Manufacturing PMI |
45.1 |
|
|
8:30 |
GBP |
BBA Mortgage Approvals |
30.2K |
|
|
9:00 |
EUR |
Flash Services PMI |
47.1 |
|
|
13:00 |
USD |
Flash Manufacturing PMI |
52.5 |
|
|
Jul 25 |
8:00 |
EUR |
German Ifo Business Climate |
105.3 |
|
8:30 |
GBP |
Prelim GDP q/q |
-0.3% |
|
|
10:00 |
GBP |
CBI Industrial Order Expectations |
-11 |
|
|
13:00 |
EUR |
Belgium NBB Business Climate |
-13.2 |
|
|
14:00 |
USD |
New Home Sales |
369K |
|
|
14:30 |
USD |
Crude Oil Inventories |
||
|
Jul 26 |
6:00 |
EUR |
GfK German Consumer Climate |
5.8 |
|
8:00 |
EUR |
M3 Money Supply y/y |
2.9% |
|
|
12:30 |
USD |
Core Durable Goods Orders m/m |
0.7% |
|
|
12:30 |
USD |
Unemployment Claims |
||
|
14:00 |
USD |
Pending Home Sales m/m |
5.9% |
|
|
Jul 27 |
27th-31st |
GBP |
Nationwide HPI m/m |
-0.6% |
|
All Day |
EUR |
German Prelim CPI m/m |
-0.1% |
|
|
7:00 |
CHF |
KOF Economic Barometer |
1.16 |
|
|
12:30 |
USD |
Advance GDP q/q |
1.9% |
|
|
13:55 |
USD |
Revised UoM Consumer Sentiment |
72.0 |
Government Bond Auctions
Date Time Country
Jul 23- n/a UK
Jul 23 09:30 Germany
Jul 24 08:30 Netherlands
Jul 24 08:30 Spain
Jul 24 15:30 Italy
Jul 24 17:00 US
Jul 25 09:30 Germany
Jul 25 15:30 Italy
Jul 25 17:00 US
Jul 26 00:30 Japan
Jul 26 09:10 Italy
Jul 27 09:10 Italy
Jul 27 17:00 US
Click here to read EUR/USD Technical Analysis.
Originally posted here
