The EUR/USD pair ended a strongly bearish week, affected by the announcement of the Greek Prime Minister to hold a general referendum on the second bailout deal; however, the interest rate cut by the European Central Bank in addition to the high level of uncertainty in Europe pressured the euro further, awaiting critical comments from world leaders and European official during the weekend.
The sentiment deteriorated in the market, while fears and rising debt concerns dominated investors after the G20 summit failed to quell jitters and provide clear decisions to aid the euro-area and prevent the crisis from spreading into other larger economies within the region.
G20 leaders have also expressed their impatience over the economic situation in the region and especially in Greece, where they were disappointed as the European Union was unable to provide a comprehensive plan and implement it as scheduled, noting that leaders demanded theUnionearlier to put an end to the debt crisis by this week.
On Thursday, the European Central Bank lowered key rates by a quarter percentage point to 1.25% from 1.50% on lower growth forecasts and steady inflation in addition to the possible Greek default.
This week, we expect volatility and heavy fluctuations to dominate the market, especially the EUR/USD pair, awaiting the confidence vote results from the Greek parliament over Papandreou’s rule and the second bailout deal and also to confirm the cancelation of the general referendum.
Lack of major fundamentals from Europe and theUnited Statesthis week will shift investors focus to any comments or steps to be made or taken by European lawmakers; however, our interest will be concentrated mainly on the retail sales index from the euro zone and the current account and trade balance from Germany.
Other news from the euro area and the U.S. economy to affect the pair this week:
Monday November 7:
The euro area will start the week at 10:00 GMT with the retail sales index for September, which is expected to expand by 0.1% from the previous drop of 0.3% over monthly basis. In addition, the annual retail sales index is expected to drop by 0.3% from the prior drop of 1.0%.
Germany will join the session at 11:00 GMT with the industrial production annual and monthly index, where the non-seasonally adjusted annual index could have retreated to 7.2% from 7.7%, while the seasonally adjusted monthly index is projected to drop by 0.6% from the previous drop of 1.0%.
At 20:00 GMT the United States is expected to release the consumer credit figure for September, which could have improved to $5.100 billion from -$9.501 billion.
Tuesday November 8:
Germany will start the session at 07:00 GMT with the current account and trade balance figures for September, where the current account surplus is expected to improve to 12.3 billion euros from 7.0 billion euros.
In addition, the seasonally adjusted exports index could have dropped to 0.5% from 3.5%, while the seasonally adjusted imports index is expected to expand by 0.4% from the previous steady reading.
Furthermore, the trade surplus could have expanded to 12.5 billion euros from 11.8 billion euros.
Wednesday November 9:
The United States will start the session at 15:00 GMT with the wholesale inventories for September, with expectations that the index could have expanded by 0.6% from 0.4%.
Thursday November 10:
Germany will start the day with the consumer price index in a final reading for October at 07:00 GMT, where the monthly CPI is expected unrevised at 0.0%, while the annual index is also expected unrevised at 2.5%.
In addition, the CPI – EU harmonised monthly index is also expected unrevised at 0.0%, while the annual index is projected to linger at 2.8%.
Germany will also release the wholesale price index for October, where the previous monthly and annual indexes were 0.3% and 5.7% respectively.
At 09:00 GMT the euro zone will join the session with the European Central Bank’s monthly report.
The United States will join the session at 13:30 GMT with the import price index for October, where the monthly index is expected to expand by 0.2% from 0.3%, while the previous annual reading was 13.4%.
The Untied States will also release the trade balance figures for September, with expectations that the trade deficit could have widened to $46.2 billion from $45.6 billion.
The United States will also provide the initial jobless claims figure (November 5), with expectations that the number of claims could have increased to 400 thousands from 397 thousands.
At 19:00 GMT the United States will join again with the monthly budget statement for October, where the budget deficit could have narrowed to $110.7 billion from $140.4 billion.
Friday November 11:
The United States will start the session at 14:55 GMT with the University of Michigan confidence in a preliminary reading for November, with expectations that the confidence could have slightly improved to 61.0 from 60.9.
