By FXEmpire.com
Analysis and Recommendations:
The EUR/USD having gained 0.5% since yesterday’s close on a combination of renewed focus on potential Fed policy, a resurgence of the discussion on the potential for the ESM banking license (unlikely in our view as it would be a form of ECB debt financing).The pair are trading at 1.2150 as the euro failed to react to the German IFO, which posted a new three year low on business expectations and appears to have priced in significant risk that Greece will fail to meet the Troika’s criteria, thereby increasing the risk of a Greek EMU exit. The downward pressure on EUR is significant and the June 2010 low of 1.1877 is beginning to act as a magnet.
News flow is generally negative, with a miss by Apple, a disappointing German IFO, a larger contraction from the UK economy than expected and confusion ongoing in Europe; however markets are adding risk to portfolio’s partially as traders are refocusing on potential policy action by the Fed (stemmed late yesterday by Jon Hilsenrath’s article in the WSJ), ECB’s Nowtony’s comments and the IMF’s outlook for a soft Chinese landing. For currencies, this has meant a generally weak USD, with EUR outperforming, up 0.7%, on the back of discussion of a banking license for the ESM. AUD is also strong, up 0.6% followed by the other commodity currencies of CAD and NZD.
Market mood was seen distorted as concerns over the global growth continued to play on investors’ mind. Also, EU official’s comments that Greece is unlikely to pay what it owes and further debt restructuring is necessary also dented market sanguinity. Into the twilight session, no major economic data from the U.S are slated for release. With the housing sector in the U.S showing signs of consolidation after lingering in the doldrums since the recession in 2009, the new home sales data in the evening session could illustrate a rise in sales of new homes in June. Also in focus this evening would be the department of Energy (DOE) crude inventory, which is expected to show a draw in inventory levels. The GDP number from the U.S on Friday is most likely to paint an anguish figure with growth slowing to 1.40 percent in contrast to 1.90 percent, a sign of further impeding for the financial markets. Overall, the week is likely to remain incarcerated to the developments in Europe and the U.S economic data.
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 25, 2012 actual v. forecast
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jul. 25 |
JPY |
Trade Balance |
-0.30T |
-0.39T |
-0.62T |
|
AUD |
CPI (QoQ) |
0.5% |
0.6% |
0.1% |
|
|
AUD |
Trimmed Mean CPI (QoQ) |
0.5% |
0.6% |
0.3% |
|
|
EUR |
German Ifo Business Climate Index |
103.3 |
104.7 |
105.2 |
|
|
EUR |
German Current Assessment |
111.6 |
113.0 |
113.9 |
|
|
EUR |
German Business Expectations |
95.6 |
96.7 |
97.2 |
|
|
GBP |
GDP (QoQ) |
-0.7% |
-0.2% |
-0.3% |
|
|
GBP |
GDP (YoY) |
-0.8% |
-0.3% |
-0.2% |
|
|
GBP |
CBI Industrial Trends Orders |
-6 |
-12 |
-11 |
|
|
USD |
New Home Sales |
372K |
369K |
Upcoming Economic Events that affect the CHF, EUR, GBP and USD
|
Date |
Time |
Currency |
Event |
Previous |
|
Jul 26 |
6:00 |
EUR |
5.8 |
|
|
8:00 |
EUR |
2.9% |
||
|
12:30 |
USD |
0.7% |
||
|
12:30 |
USD |
|||
|
14:00 |
USD |
5.9% |
||
|
Jul 27 |
27th-31st |
GBP |
-0.6% |
|
|
All Day |
EUR |
-0.1% |
||
|
7:00 |
CHF |
1.16 |
||
|
12:30 |
USD |
1.9% |
||
|
13:55 |
USD |
72.0 |
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Originally posted here
