By FXEmpire.com

Analysis and Recommendations:

The EUR/USD is trading at 1.2584 as the European markets prepare to close. US ISM manufacturing data was just released showing a continued slowdown in the US, the report came in well below forecast to the disappointment of traders.

Norway, today, blocked the use of the ESMS to fund bond purchases as part of the EU bank plan introduced on Friday putting a halt to market exhilarations, as investors begin to re-evaluate the plan and its possibilities. Even in view of poor eco data from the US the euro continues to fall.

Eurozone Unemployment rose slightly but overall European PMI was slightly above forecast.

Markets expect the ECB to lower the interest rate by 0.25% to its all-time low; which will be driving factor of Euro-dollar trade on Thursday. On the other hand, a rate cut would also be a strategic step as it would help ease the condition for incapacitated banks for paying massive interest to ECB.

However, the core problem remains intact (weak) as the bloc’s second largest economy France put a halt on its growth and its debt rose sharply to 1.789 trillion Euros taking the toll to 90% of its GDP. Hence, Hollande may announce tax increases aiming to raise 10 billion Euros to bring down the budget deficit.

The markets were seen surrendering its steam following an impressive rally on Friday after European leaders drafted in a plan to stem the region’s debt crisis. Also, playing on investor minds were weaker than expected Chinese manufacturing numbers, which raised fresh concerns over the state of financial system in the world’s second largest economy.

After optimism surged over last week’s agreement in Europe, it remains to be seen for how long bulls could lead the march before succumbing to bears.

The week has in store some heavyweight economic events, which are likely to influence market moves to a great extend. The U.S monthly Nonfarm payroll numbers on Friday would be the marquee event to watch for this week. Overall, the week is expected to remain captive to the U.S economic data and developments out of Europe

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 date for July 2, 2012 actual v. forecast

Date

Currency

Event

Actual

Forecast

Previous

July 2

JPY

Tankan Large Manufacturers Index

-1

-4

-4

CNY

Chinese HSBC Manufacturing PMI

48.20

48.10

CHF

Retail Sales (YoY)

6.2%

5.0%

0.2%

CHF

SVME PMI

48.1

45.0

45.4

EUR

French Manufacturing PMI

45.2

45.3

45.3

EUR

German Manufacturing PMI

45.0

44.7

44.7

EUR

Manufacturing PMI

45.1

44.8

44.8

GBP

Manufacturing PMI

48.6

46.7

45.9

EUR

Unemployment Rate

11.1%

11.1%

11.0%

USD

ISM Manufacturing Index

47.9

52.0

53.5

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Date

Time

Currency

Event

Forecast

Previous

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%

Government Bond Auctions

Date Time Country

Jul 03 08:30 Holland

Jul 03 09:15 Austria

Jul 03 09:30 Belgium

Jul 03 09:30 UK

Jul 03 14:30 UK

Jul 04 09:30 UK

Jul 05 08:30 Spain

Jul 05 08:50 France

Jul 05 15:00 US

Click here to read EUR/USD Technical Analysis.

Originally posted here