By FXEmpire.com
Introduction: Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.
The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.
- The interest rate differential between the European Bank(ECB) and the Federal Reserve(FED)
- Dollar strength drives EUR/USD lower
- FED intervention to weaken the dollar the sends EUR/USD higher
Weekly Analysis and Recommendation:
The EUR/USD ended a rollercoaster week that is hard to explain or follow in words, let’s just say that traders moved and positioned themselves on rumors and hopes of central bank stimulus and policy changes, with 3 important banks having meeting this month. All 3 banks maintained current policy and rates, so markets were given nothing, except hopes of new rounds of stimulus in the near future.
As the markets acted and reacted, positioned and sold, the pair jumped up and down from highs to lows faster than you could follow.
The pair ended the week at 1.2388 a number that no one was expecting. The pair gained 1.72% on Friday after the US nonfarm payroll report showed that the US had created more jobs then forecast. With traders in more relaxed mood, they turned to higher risk assets moving from the USD and the JPY, pushing up commodity currencies and commodities.
|
Date |
Open |
High |
Low |
Change % |
|
|
Aug 03, 2012 |
1.2388 |
1.2179 |
1.2392 |
1.2167 |
1.72% |
|
Aug 02, 2012 |
1.2179 |
1.2237 |
1.2401 |
1.2134 |
-0.49% |
|
Aug 01, 2012 |
1.2239 |
1.2292 |
1.2336 |
1.2219 |
-0.43% |
|
Jul 31, 2012 |
1.2292 |
1.2260 |
1.2330 |
1.2250 |
0.26% |
|
Jul 30, 2012 |
1.2260 |
1.2303 |
1.2306 |
1.2226 |
-0.35% |
European markets will be principally focused upon extending their interpretation of the ECB’s recent policy guidance, key factory and trade data, and some bond auctions. Three bond auctions in Germany, Belgium and the UK will test the European appetite for safe havens versus peripheral debt in the wake of the ECB meeting. Germany and the UK could well see higher funding costs out of these auctions as safe haven appeal diminishes somewhat. ECB President Mario Draghi took a calculated risk by signaling further unconventional policy measures — perhaps including bond buying — essentially if beleaguered states first submit to the EFSF/ESM apparatus for financial assistance and Brussels for grander oversight. This may be a positive development, but key risks remain. One is the German constitutional court ruling on the ESM in September. Another is the willingness of Spain and Italy to subject themselves to oversight from Brussels and Germany. Third is the ability of Spain and Italy to actually achieve progress on fiscal targets given a checkered pattern in Greece, Portugal, Spain and Italy thus far throughout the crisis.
So to put it in easy to understand terms, The ECB, Spain, Germany, Greece and Italy will be the focus of the markets along with eco data.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthlyanalysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.
Major Economic Events for the week of Aug 30 – Jul 3 actual v. forecast for Euro, GPB, the Franc, and USD
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jul 30 |
EUR |
Spanish Flash GDP q/q |
-0.4% |
-0.4% |
-0.3% |
|
EUR |
Italian 10-y Bond Auction |
5.96|1.3 |
5.82|1.7 |
||
|
Jul 31 |
USD |
CB Consumer Confidence |
65.9 |
61.5 |
62.7 |
|
Aug 1 |
CNY |
Manufacturing PMI |
50.1 |
50.4 |
50.2 |
|
GBP |
Manufacturing PMI |
45.4 |
48.6 |
48.4 |
|
|
USD |
ADP Non-Farm Employment Change |
163K |
121K |
172K |
|
|
USD |
ISM Manufacturing PMI |
49.8 |
50.3 |
49.7 |
|
|
USD |
FOMC Statement |
||||
|
Aug 2 |
GBP |
Construction PMI |
50.9 |
48.2 |
48.2 |
|
EUR |
Spanish 10-y Bond Auction |
6.65|2.4 |
6.43|3.2 |
||
|
GBP |
Asset Purchase Facility |
375B |
375B |
375B |
|
|
GBP |
Official Bank Rate |
0.50% |
0.50% |
0.50% |
|
|
EUR |
Minimum Bid Rate |
0.75% |
0.75% |
0.75% |
|
|
EUR |
ECB Press Conference |
||||
|
USD |
Unemployment Claims |
365K |
375K |
357K |
|
|
Aug 3 |
GBP |
Services PMI |
51.0 |
51.6 |
51.3 |
|
USD |
Non-Farm Employment Change |
163K |
101K |
64K |
|
|
USD |
Unemployment Rate |
8.3% |
8.2% |
8.2% |
|
|
USD |
ISM Non-Manufacturing PMI |
52.6 |
52.1 |
52.1 |
Historical: From 2010 to Present
Highest: 1.4940 USD on May 04, 2011.
Average: 1.3434 USD over this period.
Lowest: 1.1877 USD on Jun 07, 2010.
Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD
|
Date |
Time |
Currency |
Event |
Previous |
|
Aug 6 |
8:30 |
EUR |
Sentix Investor Confidence |
-29.6 |
|
23:01 |
GBP |
BRC Retail Sales Monitor y/y |
1.4% |
|
|
Aug 7 |
7:00 |
CHF |
Foreign Currency Reserves |
364.9B |
|
7:15 |
CHF |
CPI m/m |
-0.3% |
|
|
8:00 |
EUR |
Italian Industrial Production m/m |
0.8% |
|
|
8:30 |
GBP |
Manufacturing Production m/m |
1.2% |
|
|
10:00 |
EUR |
German Factory Orders m/m |
0.6% |
|
|
14:00 |
GBP |
NIESR GDP Estimate |
-0.2% |
|
|
Aug 8 |
5:45 |
CHF |
SECO Consumer Climate |
-8 |
|
9:30 |
GBP |
BOE Inflation Report |
||
|
10:00 |
EUR |
German Industrial Production m/m |
1.6% |
|
|
12:30 |
USD |
Prelim Nonfarm Productivity q/q |
-0.9% |
|
|
12:30 |
USD |
Prelim Unit Labor Costs q/q |
1.3% |
|
|
14:30 |
USD |
Crude Oil Inventories |
||
|
Aug 9 |
8:00 |
EUR |
ECB Monthly Bulletin |
|
|
8:30 |
GBP |
Trade Balance |
-8.4B |
|
|
12:30 |
USD |
Trade Balance |
-48.7B |
|
|
12:30 |
USD |
Unemployment Claims |
||
|
Aug 10 |
6:45 |
EUR |
French Industrial Production m/m |
-1.9% |
|
8:30 |
GBP |
PPI Input m/m |
-2.2% |
|
|
12:30 |
USD |
Import Prices m/m |
-2.7% |
|
|
18:00 |
USD |
Federal Budget Balance |
-59.7B |
Upcoming Government Bond Auctions
Date Time Country
Aug 06 09:10 Norway
Aug 07 00:30 Japan
Aug 07 09:15 Austria
Aug 07 14:30 UK
Aug 07 17:00 US
Aug 08 09:30 Germany
Aug 08 10:00 Norway
Aug 08 15:30 Italy
Aug 08 17:00 US
Aug 09 15:30 Italy
Aug 09 17:00 US
Aug 10 10:00 Belgium
Aug 13 09:10 Italy
Aug 13 09:10 Norway
Aug 13 09:30 Germany
Aug 14 09:10 Greece
Aug 14 09:10 Italy
Aug 14 09:30 Belgium
Aug 14 14:30 UK
Aug 15 09:10 Sweden
Aug 16 09:30 UK
Aug 16 15:00 US
Click here to read EUR/USD Technical Analysis.
Originally posted here
