The EUR/USD pair ended a strongly bearish week, affected by rising yields on European indebted nations’ bonds in addition to the disagreement between European leaders over the means to fight back the debt crisis, which spread pessimism further in the market and sent the EUR/USD pair to the lowest level recorded in seven weeks.
The sentiment deteriorated further last week as Italian yields surged again, which led European Officials to reduce the fire power of the European Financial Stability Facility, where they explained that the rescue fund could provide only the half of the amount previously planned due to the ongoing incline in yields.
Moreover, jitters and rising debt woes spread further in the market after Germany was not able to sell as much bonds as planned, which forced the German Central Bank (Bundesbank) to intervene and buy almost half of the amount to assure the success of the auction, where investors are demanding higher yields since the fall of the euro means the fall of the entire union, and in result investors preferred to hold Italian and Spanish bonds rather than German Bunds, which gives lower yields, in the time the risk is almost equal.
Furthermore, Merkel in a meeting the Sarkozy and Mario Monti, the fresh Italian Prime Minister, explained theGermanyis still against the intervention of the European Central Bank and the issuance of European joint bonds, where the Chancellor explained that joint bonds would eliminate incentives for European nations to seek fiscal consolidation and improve their budgets.
This week our eyes will be focused on the euro zone and European Union finance ministers meeting on November 29 and 30 respectively, where markets are tracking any comment, proposal or plan that aims to solve the debt crisis and prevent it from spreading further into the euro-area region, where the debt crisis is expanding quickly to larger economies raising more risk that the once currency union could fail soon unless lawmakers act in the right time to block the crisis, which sent the confidence further to the downside and spread pessimism and fears in the market.
Turning to the critical fundamentals awaited this week, the United States, Germany and the euro-area region are to release unemployment and manufacturing data, where expectations indicate that the United states public sector is to add more jobs this month, while unemployment is expected to remain unchanged in the euro zone, in the time unemployment could improve slightly in Germany, which if confirm, could spread a slight wave of optimism in the market.
Other news from the euro area and the U.S. economy to affect the pair this week:
Monday November 28:
Germanywill start this week at 07:00 GMT with the GFK consumer confidence survey for December, where the confidence is expected to slip slightly to 5.2 from 5.3.
The euro zone will join the session at 09:00 GMT with the M3 money supply for October, with expectations the seasonally-adjusted three-month average could have expanded by 3.1% from 2.6%, while the annual index could have improved 3.4% from 3.1%.
TheUnited Stateswill join the session at 13:00 GMT with the new home sales figures for October, with expectations that the number on new homes sales could retreat to 310 thousands from the previous 313 thousands, while the monthly new home sales index could have dropped by 1.0% from 2.3%.
During the dayGermanywill release the Consumer Price index second reading for November, where the monthly CPI index is expected to expand by 0.1% from the previous steady reading, while the annual CPI index could have slowed to 2.4% from the previous 2.5%.
Germanywill also provide the CPI harmonised indexes for November in a second reading, with expectations the monthly index could have dropped 0.1% from the previous 0.1%, while the annual index is expected lower at 2.8% from 2.9%.
Tuesday November 29:
The euro zone will start the day at 10:00 GMT with the European Confidence data for November, where the business climate indicator could have dropped further to 0.23 from 0.18, while the consumer confidence final reading is expected to linger at -20.4, in the time the economic confidence could have retreated slightly to 94.0 from 94.8.
The industrial confidence is expected lower at -7.0 from -6.6, while the services confidence is expected to linger at 10.2.
TheUnited Stateswill join the session at 14:00 GMT with the S&P/CS 20 report for September, where the monthly S&P/CS 20 City index is projected to remain steady compared with the previous drop of 0.05%, in the time the annual S&P/CS composite-20 could have dropped 3.00% from the previous drop of 3.80%.
At 15:00 GMT theUnited Stateswill announce the consumer confidence for November, with expectations it could have improved to 44.4 from 39.8.
Wednesday November 30:
Germany will start the session at 08:55 GMT with the unemployment report for November, where the unemployment figure is expected 7 thousands lower compared with the previous surge of 10 thousand jobs in unemployment. In addition, the unemployment rate is expected to linger at 7.0%.
The euro zone will join the session at 10:00 GMT with the annual CPI flash estimate for November, which is expected to remain steady at 3.0%.
The euro zone will also release the unemployment rate for October, with expectations that unemployment could have remained unchanged at 10.2%.
TheUnited Stateswill join the session at 13:15 GMT with the ADP employment change for November, which is expected to show that theU.S.private sector could have added 130 thousand new jobs compared with the previous addition of 110 thousands in October.
At 13:30 GMT theUnited Stateswill provide the nonfarm productivity and the unit cost labor indexes for the third quarter in a final reading, where the nonfarm productivity index is expected to expand by 2.6% from 3.1%, while the unit labor costs index could have dropped by 2.1% from the previous drop of 2.4%.
At 14:45 GMT theUnited Stateswill also release theChicagopurchasing manager indicator for November, with expectations the indicator could have slightly improved to 58.5 from 58.4.
At 15:00 GMT theUnited Stateswill end the session with the pending home sales indexes for October, where the monthly index could have expanded 1.2% from the previous drop of 4.6%, while the annual index previous reading was 7.9%
Thursday December 1:
Germanywill start the session at 08:55 GMT with the PMI manufacturing for November in a final reading, where the index is expected unchanged at 47.9.
The euro zone will join the session at 09:00 GMT with the PMI manufacturing index for November in a final reading, with expectations the index could have lingered at 46.4.
TheUnited Stateswill join the session at 13:30 GMT with the initial jobless claims figure (November 26), where the number of claims could have retreated to 390 thousands from 393 thousands.
At 15:00 GMT theUnited Stateswill provide the construction spending monthly index for October, which could have expanded by 0.4% from 0.2%.
The ISM manufacturing for November could improved to 51.5 from 50.8, while the ISM prices paid indicator could have expanded to 45.0 from 41.0.
Friday December 2:
The euro zone will start the session at 10:00 GMT with the producer price index for October, where the monthly PPI index is expected to expand 0.2% from 0.3%, while the annual index could have expanded by 5.6% compared with the previous of 5.8%.
TheUnited Stateswill join the session at 13:30 GMT with the closely watched jobs report for November, where the public sector could have added 120 thousand jobs to the economy compared with the previous addition of 80 thousands jobs in October, while the unemployment rate is expected to linger at 9.0%.
Originally posted here
