The EUR/USD pair ended a mixed week after the European Central Bank disappointed investors, while European leaders were able to create a strong firepower to stop the debt crisis, yet next week we will track the reaction to their comprehensive plan, and then eyes will focus on the implementation of these measures taken.
The European Central Bank cut key rates as expected in order to spur growth and support the pace of recovery, while the bank also offered 3-year loans for bank in order to prevent an interbank lending freeze from threatening the monetary union, yet the bank reassured that the European Union treaty doesn’t allow it to provide financing for governments or to the European Financial Stability Facility.
Moreover, all European nations except the United Kingdom agreed to the changes in the treaty, which led European leaders to come up with an intergovernmental treaty, which will include the 17 euro-area nations in addition to any EU nation that would like to join, and in result the all nations see their parliaments to join expect U.K. that rejected the fiscal pact; however, non euro-area nations will have to approve this treaty through their parliaments ahead of joining the new intergovernmental pact.
This week, investors will look forward to the finalizing process by European nations where we expect volatile to extend through the sessions this week, especially when eyes will be focused on the European bond auctions, with hopes bond yields decline this time after European leaders agreed to drop the private sector involvement in the cost of bailouts provided for European indebted nations in the futures as part of the ESM that was previously approved and now instead will follow the IMF guidelines.
Turning to critical fundamentals this week, the Federal Open Market Committee (FOMC) rate decision will highlight this week, where the Federal Reserve is expected to leave rates unchanged especially when improvement is seen in theUnited Stateseconomy.
The euro zone will provide PMI figures this week, where investors will track the figures, especially when further contraction in the manufacturing and services sectors could confirm that Europe is slipping into a “mild” recession.
Other news from the euro area and the U.S. economy to affect the pair this week:
Monday December 12:
TheUnited Stateswill start this week at 19:00 GMT with the monthly budget statement for November, where the budget deficit could have narrowed to $140.0 billion from $150.4 billion.
Tuesday December 13:
Germanywill start the session at 10:00 GMT with the ZEW Survey for December, where the current situation previous reading was 34.2, while the economic sentiment is expected to improve slightly to -55.0 from the previous -55.2.
The euro zone will also provide ZEW survey for the economic sentiment for December, where the previous reading was -59.1.
TheUnited Stateswill join the session at 13:30 GMT with the retail sales index for November, where the advance retail sales index could have expanded by 0.6% from 0.5%, while the retail sales less Autos index could have advanced by 0.5% from 0.6%.
At 15:00 GMT theUnited Stateswill provide the business inventories index for October, which could have improved 0.4% from the previous steady reading.
At 19:15 GMT the Federal Open Market Committee (FOMC) will announce the rate decision (DEC 13), with expectations the Federal Bank could have left rates unchanged at 0.25%.
Wednesday December 14:
The euro zone will start the session at 10:00 GMT with the industrial production index for October, where the annual working-day adjusted index previous reading was 2.2%, while the seasonally-adjusted monthly index is expected to drop by 0.3% from the previous drop of 2.0%.
TheUnited Stateswill join the session at 13:30 GMT with the import price index for November, where the monthly index is expected to expand by 1.0% from the previous drop of 0.6%, while the annual index previous reading was 11.0%.
Thursday December 15:
Germanywill start the session at 08:30 GMT with the purchasing managers’ advanced index for manufacturing and services for the month of December, where the PMI manufacturing previous index was 47.9, while the prior PMI services index was 50.3.
The euro zone will join the session at 09:00 GMT with European Central Bank issuing the monthly report for December.
The euro zone will also release the composite, manufacturing and service purchasing managers’ advanced index, where the PMI composite, manufacturing and service previous reading were 47.0, 46.4 and 47.5 respectively.
At 10:00 GMT the euro zone will provide the consumer price index for November, where the annual CPI Core, monthly CPI and annual CPI indexes prior reading were 1.6%, 0.3% and 3.0% respectively.
The euro-area region will also release the employment index for the third quarter, where the quarterly and annual prior changes were 0.3% and 0.4% respectively.
The United States will join the session at 13:30 GMT with the producer price index for November, where the monthly PPI index is expected to expand by 0.2% from the previous drop of 0.3%, while the PPI excluding food and energy monthly index could have expanded by 0.2% from the previous steady reading, in the time the annual PPI index could have remained unchanged at 5.9%, and finally the annual PPI excluding food and energy could have lingered at 2.8%.
TheUnited Stateswill also release the Empire manufacturing index for December, which could have improved to 2.50 from 0.61.
Furthermore, theUnited Stateswill also provide the initial jobless claims figure (DEC 10), which could have inclined to 390 thousand claims from 381 thousands.
At 14:00 GMT theUnited Stateswill return with the TIC flows for October, where the net long-term TIC flows previous reading was $68.6 billion, while the total net TIC flows previous reading was 57.4 billion.
At 14:15 GMT theUnited Stateswill release the Industrial production index for November, where the industrial production index could have expanded by 0.2% from 0.7%, while the capacity utilization index could improve to 77.9% from 77.8%.
At 15:00 GMT theUnited Stateswill provide markets with the Philadelphia Federal District indicator, which could have improved to 5.0 from 3.6.
Friday December 16:
The euro zone will start the session at 10:00 GMT with the trade balance figures for October, where the seasonally adjusted prior surplus was 2.1 billion euros, while the prior trade surplus was 2.9 billion euros.
The United States will join the session at 13:30 GMT with the consumer price index for November, where the monthly index could have expanded by 0.1% from the prior drop of 0.1%, while the CPI excluding food and energy monthly index could have also improved by 0.1% from 0.1%, in the time the annual consumer price index is expected to remain unchanged at 3.5%, and finally the CPI excluding food and energy annual index is also projected to linger at 2.1%.
Originally posted here
