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 surged on Friday to trade close to the 1.27 level, and closed the month and quarter at 1.2662. After a week of bickering and arguing, gesturing and positioning by the EU Ministers markets had given up on any hopes of any success. The euro fell all week, over the disappointment and the worries about the continued EU situation. With rates climbing in Spain and Italy and Greece threatening to depart from the EU, markets were very weary.
|
Date |
Open |
High |
Low |
Change % |
|
|
Jun 29, 2012 |
1.2662 |
1.2441 |
1.2692 |
1.2433 |
1.77% |
|
Jun 28, 2012 |
1.2442 |
1.2470 |
1.2525 |
1.2408 |
-0.22% |
|
Jun 27, 2012 |
1.2470 |
1.2485 |
1.2508 |
1.2446 |
-0.13% |
|
Jun 26, 2012 |
1.2486 |
1.2503 |
1.2531 |
1.2442 |
-0.14% |
|
Jun 25, 2012 |
1.2503 |
1.2538 |
1.2545 |
1.2472 |
-0.28% |
On Friday, EU Ministers announced a new plan to immediately assist EU nations dealing with debt problems and interest rates and liquidity.
Summary of Euro Area Summit Statement:
1. A proposal for a single bank supervisor.
2. After a single bank supervisor is established, the ESM could have the possibility to recapitalize banks directly.
3. Ireland will be treated equally as well as all prior agreement.
4. The EFSF will be used until the ESM becomes available.
5. EFSF loans will be transferred to the ESM without any seniority.
6. Strong commitment to do what is necessary.
7. The above to be implemented by July 9, 2012.
There was also a reiteration of the EUR130bn growth pact that the gang of 4 had agreed to last Friday. Markets will take the weekend to review the new plans and Monday will tell the story.
This week there is a lot of eco risk coming at the markets. In the US ISM manufacturing data will be release followed by the Nonfarm Payroll reports. In Europe, markets are facing a series of eco reports ranging from jobs to housing. With prior readings on the German economy turning down, markets will be closely watching that country’s factory data. German factory orders (Thursday) fell 1.9% m/m in April and are expected to be flat in May. Similarly, German industrial production (Friday) slid by 2.2% m/m in April and is expected to rise only marginally in May. Manufacturing data remains a global theme for the week with the UK’s PMI expected to remain in contraction when it is updated on Monday. Key EC releases will include the unemployment rate that stands at 11.1% by the last reading, and retail trade that fell hard in April and which is expected to rise only marginally in May. Also worth watching will be planned post-Summit meetings and speeches involving each of Merkel, Monti, and Hollande, as well as the European Commission’s release of its quarterly report on the Euro Area on Friday.
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 June 25 – 29 actual v. forecast for Euro, GPB and the Franc
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jun 26 |
EUR |
GfK German Consumer Climate |
5.8 |
5.7 |
5.7 |
|
GBP |
Public Sector Net Borrowing |
15.6B |
13.6B |
-19.9B |
|
|
Jun 27 |
EUR |
German Prelim CPI m/m |
-0.1% |
0.0% |
-0.2% |
|
GBP |
BBA Mortgage Approvals |
30.2K |
32.8K |
32.1K |
|
|
GBP |
CBI Realized Sales |
42 |
12 |
21 |
|
|
Jun 28 |
GBP |
Nationwide HPI m/m |
-0.6% |
0.3% |
0.2% |
|
EUR |
German Unemployment Change |
7K |
4K |
1K |
|
|
GBP |
Current Account |
-11.2B |
-8.9B |
-7.2B |
|
|
GBP |
Final GDP q/q |
-0.3% |
-0.3% |
-0.3% |
|
|
GBP |
Final GDP q/q |
-0.3% |
-0.3% |
-0.3% |
|
|
GBP |
GfK Consumer Confidence |
-29 |
-30 |
-29 |
|
|
EUR |
German Retail Sales m/m |
-0.3% |
0.1% |
-0.2% |
|
|
Jun 29 |
EUR |
French Consumer Spending m/m |
0.4% |
0.0% |
0.7% |
|
CHF |
KOF Economic Barometer |
1.16 |
0.87 |
0.80 |
|
|
EUR |
M3 Money Supply y/y |
2.9% |
2.4% |
2.5% |
|
|
EUR |
CPI Flash Estimate y/y |
2.4% |
2.4% |
2.4% |
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 |
Forecast |
Previous |
|
Jul 2 |
3:15am |
CHF |
Retail Sales y/y |
0.9% |
0.1% |
|
3:30am |
CHF |
SVME PMI |
44.6 |
45.4 |
|
|
3:45am |
EUR |
Italian Manufacturing PMI |
44.6 |
44.8 |
|
|
4:30am |
GBP |
Manufacturing PMI |
46.7 |
45.9 |
|
|
5:00am |
EUR |
Unemployment Rate |
11.1% |
11.0% |
|
|
10:00am |
USD |
ISM Manufacturing PMI |
52.1 |
53.5 |
|
|
Jul 3 |
3rd-6th |
GBP |
Halifax HPI m/m |
-0.3% |
0.5% |
|
4:30am |
GBP |
Construction PMI |
53.1 |
54.4 |
|
|
4:30am |
GBP |
Net Lending to Individuals m/m |
1.1B |
1.4B |
|
|
10:00am |
USD |
Factory Orders m/m |
0.1% |
-0.6% |
|
|
Jul 4 Jul 5 |
4:00am |
EUR |
Final Services PMI |
46.8 |
46.8 |
|
4:30am |
GBP |
Services PMI |
53.0 |
53.3 |
|
|
5:00am |
EUR |
Retail Sales m/m |
0.2% |
-1.0% |
|
|
6:00am |
EUR |
German Factory Orders m/m |
0.2% |
-1.9% |
|
|
7:00am |
GBP |
Official Bank Rate |
0.50% |
0.50% |
|
|
7:45am |
EUR |
Minimum Bid Rate |
0.75% |
1.00% |
|
|
8:15am |
USD |
ADP Non-Farm Employment Change |
101K |
133K |
|
|
8:30am |
USD |
Unemployment Claims |
385K |
386K |
|
|
10:00am |
USD |
ISM Non-Manufacturing PMI |
53.1 |
53.7 |
|
|
11:00am |
USD |
Crude Oil Inventories |
-0.1M |
||
|
Jul 6 |
3:00am |
CHF |
Foreign Currency Reserves |
303.8B |
|
|
3:15am |
CHF |
CPI m/m |
-0.3% |
0.0% |
|
|
4:30am |
GBP |
PPI Input m/m |
-2.1% |
-2.5% |
|
|
6:00am |
EUR |
German Industrial Production m/m |
0.3% |
-2.2% |
|
|
8:30am |
USD |
Non-Farm Employment Change |
92K |
69K |
|
|
8:30am |
USD |
Unemployment Rate |
8.2% |
8.2% |
Click here for further EUR/USD Forecast.
Originally posted here
