By FXEmpire.com
Analysis and Recommendations:
The EUR/USD continues to be weak, trading at 1.2257 as global sentiment turns negative on the EU. Last week there was elation in the markets with the hopes of action by the EU Ministers and each day, it diminishes a bit more. This week’s meeting with the Eurogroup was supposed to be the call to action, to begin the launch of the bank plan, instead, very little is moving forward.
Finance ministers in Europe have agreed to make EUR30bn available to Spain’s financial sector by the end of July. According to officials, the loans will not require a sovereign guarantee, and thus will not add to the Spanish government’s contingent liabilities. However, mixed messages have already surfaced, with Germany’s finance minister Schaeuble saying that the Spanish government would be initially liable. The loans will be provided to a Spain’s bailout fund ‘Frob’ – meaning that the government will indeed be liable initially. Funds will come from the EFSF (to then be transferred to the ESM) and will have maturities ranging between 12.5 and 15 years.
Finally, the ministers have also provided leniency with regards to Spain’s deficit targets, helping PM Rajoy deal with an issue that was identified in early March.
Yesterday’s quarterly testimony from ECB President Draghi to the European Parliament’s economic and monetary committee generated an important discussion on the future path for the EU. In a three step process, Draghi indicated that (1) unified banking oversight would be followed by (2) fiscal union, resulting in (3) a reduction of imbalances, paving the way for euro bonds over the course of a multi-year process. With regards to the size of the EFSF / ESM, Draghi was confident that the ‘firepower’ was sufficient to deal with the region’s issues, and with regards to publishing additional details (specifically, meeting minutes) Draghi pushed back, stating that he thought it best to preserve national identities.
Across the pond as they say, more and more support for the USD strengthens the greenback as traders are now expecting the Fed’s to supply additional stimulus in the near future to help jumpstart the stalled US economy, after the poor jobs report last 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 up to the data analysis and information in our weekly reports
Economic Data July 10, 2012 actual v. forecast
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jul. 10 |
GBP |
RICS House Price Balance |
-22% |
-16% |
-17% |
|
AUD |
NAB Business Confidence |
-3 |
-2 |
||
|
CNY |
Chinese Trade Balance |
31.73B |
21.00B |
18.70B |
|
|
DKK |
Danish CPI (YoY) |
2.20% |
2.20% |
2.10% |
|
|
NOK |
Norwegian Core Inflation (MoM) |
-0.30% |
0.10% |
0.40% |
|
|
NOK |
Norwegian CPI (MoM) |
-0.50% |
-0.10% |
0.00% |
|
|
GBP |
Industrial Production (MoM) |
1.0% |
-0.2% |
-0.4% |
|
|
GBP |
Manufacturing Production (MoM) |
1.2% |
0.1% |
-0.8% |
|
|
GBP |
Trade Balance |
-8.4B |
-9.0B |
-9.7B |
|
|
GBP |
Industrial Production (YoY) |
-1.6% |
-2.1% |
-2.0% |
|
|
Housing Starts |
222.7K |
205.0K |
217.4K |
||
|
GBP |
NIESR GDP Estimate |
-0.2% |
0.1% |
Upcoming Economic Events that affect the CHF, EUR, GBP and USD
|
Date |
Time |
Currency |
Event |
Previous |
|
Jul 11 |
12:30 |
USD |
-50.1B |
|
|
14:30 |
USD |
-4.3M |
||
|
Jul 12 |
9:00 |
EUR |
-0.8% |
|
|
12:30 |
USD |
|||
|
12:30 |
USD |
-1.0% |
||
|
18:00 |
USD |
-124.6B |
||
|
7:15 |
CHF |
-0.2% |
||
|
Jul 13 |
12:30 |
USD |
-1.0% |
|
|
13:55 |
USD |
73.2 |
Government Bond Auctions
Date Time Country
Jul 11 09:30 Germany
Jul 11 09:30 Swiss
Jul 11 17:00 US
Jul 12 09:10 Italy
Jul 12 09:30 UK
Jul 12 15:00 US
Jul 12 17:00 US
Jul 13 09:10 Italy
Jul 13 10:00 Belgium
Click here to read EUR/USD Technical Analysis.
Originally posted here
