By FXEmpire.com
Analysis and Recommendations:
The EUR/USD continued to fall today, dropping below the 1.27 price and remaining in that territory. The pair closed the European session at 1.2767. The pair will most likely remain depressed until we see some outcome in Greece and after we hear comments from Hollande and Merkel on the future moves of the EU. Markets are factoring in the Greek exit. Why they did not let it happen a few weeks ago, one will never understand.
Market sentiment towards the euro remains depressed. The euro continues to seek new lows without much support; even positive eco data was unable to lift the euro upwards.
European benchmarks are modestly positive following somewhat exaggerated headlines on eurozone GDP growth, but the gains have been softening as the European trading day progresses. Convincing bond investors is a tougher task. Spanish, Italian and Portuguese yields remain under upward pressure, with Spanish 10s trading at their most elevated yield since the end of November 2011. Yields on US and German 10s are slightly higher and feeding some of the flow back into the broader risk trade, albeit not into peripheral European debt. Currency markets are also participating in a minor risk rally, with most of the major crosses up against the USD except for pound sterling, the won, NZ$, and yen.
Developments in Greece are reaching the make it or break it point today and tomorrow. Today the country will decide upon whether or not to pay EUR436 million to holders of an issue left outside of the debt restructuring in March, and newswires are suggesting that it will indeed pay.
European GDP figures for Q1 put in a mixed performance. On net, the broad eurozone escaped technical recession by a whisker as GDP came in flat in Q1 following a 0.3% contraction in Q4. True, Q1 came in slightly better than consensus expectations for a drop of -0.2%, but headlines on how the eurozone escaped recession and that’s supposed to be bullish are a tad exaggerated. That averts a technical recession, but growth still remains weak in Germany.
Germany’s ZEW survey of institutional investors and analysts showed that German market participants are turning bearish again. The poll showed that ‘economic sentiment’ dipped (10.8 on the index in May vs. 23.4 in April) while the assessment of the ‘current economic situation’ improved (44.1 in May vs. 39 in April). As we see from today’s GDP data, the reality is somewhat more prosaic, and shows that Germany is muddling through a difficult economic environment, outperforming most European countries but growing below potential.
French April CPI is a bit of an afterthought amidst the drama in Greece and the release of GDP data. It showed April French inflation easing to 2.1% y/y from 2.3% y/y in March. Our European economics team thinks that the data might necessitate a slight downward revision of Europe-wide inflation for April too.
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 up to the data analysis and information in our weekly reports, which cover the current week and are published by Sunday before the new week begins.
Economic Reports May 15, 2012 actual v. forecast
|
EUR |
French CPI (MoM) |
0.1% |
0.3% |
0.8% |
|
EUR |
French GDP (QoQ) |
0.0% |
0.0% |
0.1% |
|
EUR |
German GDP (QoQ) |
0.5% |
0.1% |
-0.2% |
|
EUR |
German GDP (YoY) |
1.7% |
0.8% |
1.5% |
|
EUR |
French Non-Farm Payrolls (QoQ) |
0.1% |
-0.2% |
-0.1% |
|
GBP |
Trade Balance |
-8.6B |
-8.4B |
-8.6B |
|
EUR |
GDP (QoQ) |
0.0% |
-0.2% |
-0.3% |
|
EUR |
German ZEW Economic Sentiment |
10.8 |
19.0 |
23.4 |
|
EUR |
ZEW Economic Sentiment |
-2.4 |
11.7 |
13.1 |
|
USD |
Core CPI (MoM) |
0.2% |
0.2% |
0.2% |
|
USD |
Core Retail Sales (MoM) |
0.1% |
0.2% |
0.8% |
|
USD |
CPI (MoM) |
0.0% |
0.1% |
0.3% |
|
USD |
Retail Sales (MoM) |
0.1% |
0.2% |
0.7% |
|
USD |
NY Empire State MFG Index |
17.1 |
8.5 |
6.6 |
|
USD |
CPI (YoY) |
2.3% |
2.3% |
2.7% |
|
USD |
Core CPI (YoY) |
2.3% |
2.3% |
2.3% |
|
USD |
TIC Net Long-Term Transactions |
36.2B |
19.4B |
10.1B |
Upcoming Economic Events that affect the CHF, EUR, GBP and USD
|
May 16 |
09:30 |
GBP |
1.0% |
1.1% |
|
|
09:30 |
GBP |
5.0K |
3.6K |
||
|
10:00 |
EUR |
2.6% |
2.6% |
||
|
10:00 |
EUR |
1.5% |
1.6% |
||
|
10:30 |
GBP |
||||
|
10:30 |
GBP |
||||
|
10:30 |
EUR |
1.770% |
|||
|
11:00 |
EUR |
14.00% |
|||
|
13:30 |
USD |
0.730M |
0.764M |
||
|
13:30 |
USD |
0.680M |
0.654M |
||
|
14:15 |
USD |
0.6% |
0.0% |
||
|
15:00 |
EUR |
||||
|
19:00 |
USD |
||||
|
May 17 |
13:30 |
USD |
365K |
367K |
|
|
13:30 |
USD |
3235K |
3229K |
||
|
15:00 |
USD |
10.0 |
8.5 |
Government Bond Auctions (this week)
Date Time Country
May 16 08:50 France
May 16 09:10 Sweden
May 16 09:30 Germany
May 16 09:50 France
May 16 14:30 Sweden
May 17 08:30 Spain
May 17 15:00 US
May 17 17:00 US
Click here to read EUR/USD Technical Analysis.
Originally posted here
