EUR/USD Forecast Apr. 27 – May 1
EUR/USD had a choppy week, feeling some pressure but not falling too far. Inflation data stands out just before the May 1st holiday. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Greek headlines drifted between deteriorating conditions and Grexit talk to optimism or at least a deadline delay. This had a growing impact on the common currency. For a change, most euro-zone figures fell short of expectations and that also took its toll. In the US, data began looking better, with existing home sales beating expectations. But it’s far from looking rosy and as the week advanced, the dollar was hit by weak data. All in all, it’s a mixed picture with quite a lot of action.
- German Import Prices: Wednesday, 6:00. Prices of imported goods also feed into inflation calculations and are impacted by the exchange rate. A surprising jump of 1.4% was seen in February. Another rise of 0.4% could be seen now
- German CPI: Wednesday, state data released during the morning with the all-German read coming at 12:00. The largest economy in the euro-zone saw prices rising by 0.5% in March, a second consecutive beat of expectations. A drop of 0.1% is expected in the early release for April.
- ECB monetary data: Wednesday, 8:00. The European Central Bank has made a lot of efforts to pump money, and this is bearing fruit. The annual rise in the M3 Money Supply stands at 4%, after long months of a very slow rise in the amount of money in circulation. 4.3% is predicted now Private loans are still contracting on a y/y basis, at 0.1% in February. The figures for March are expected to show an improvement, especially on the background of QE implementation with an annual rise of 0.2%.
- French Consumer Spending: Thursday, 6:45. The zone’s second largest economy has enjoyed 4 consecutive months of growing spending by consumers, but the figure for February fell short of predictions by rising only +0.1%. A drop of 0.5% is on the cards now.
- Spanish Flash GDP: Thursday, 7:00. As one of the first countries that releases in GDP data, this will be closely watched. The country enjoyed a strong growth rate of 0.7% q/q in the last quarter of 2014. According to government officials, growth could even be stronger now: 0.8%.
- Spanish Flash CPI: Thursday, 7:00. Growth is partially built on a fall in prices. The zone’s fourth largest economy suffered from one of the worst levels of deflation, but this seems to be waning off. For March, a fall of 0.7% was seen in CPI. The same annual drop in prices is expected in the preliminary number for April.
- German Unemployment Change: Thursday, 7:55. Germany enjoyed many months of drops in the number of unemployed. In February, Germany saw a drop of 15K and the unemployment rate stood on 6.5%. Another similar drop is on the cards: -14K.
- ECB Economic Bulletin: Thursday, 8:00. The data in this report is what the governing council of the central bank sees before making its monetary decisions. In the April rate decision, no policy change was announced and Draghi shrugged off talk about QE tapering despite the economic improvement. This could give some more insight into the current conditions.
- Inflation data: Thursday, 9:00. The euro-zone remained in deflation in March, with a drop of 0.1% in prices, but this was better than expected. Core inflation stood on 0.6% and showed that the underlying weakness – it is not only oil prices. Headline CPI carries expectations for a flat 0% while core CPI is expected to stand at 0.6% once again.
- Unemployment Rate: Friday, Thursday, 9:00. After a few signs of falls in unemployment, the situation isn’t too good. At 11.3%, the old continent has a long way to go. A small drop is on the cards now for March, to 11.2%.
* All times are GMT
EUR/USD Forecast May 4-8
EUR/USD stormed higher, breaking resistance and hardly stopping to breath. Can this impressive rally continue? PMIs are among the important releases in a busy week that will also have one eye on Greece. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Greek jitters continued rattling markets. Reports about despair and compromise in Greece helped the common currency, as did hopes for a solution even before the deadline. The rise in German bunds and a squeeze of EUR/USD shorts also helped on the European side, where the euro ignored weak euro-zone data.. In the US, poor GDP sent the pair shooting above the critical 1.1050 level. When the Fed sounded more optimistic and consequent US data also improved, the greenback recovered, but hardly so against the euro. Can the pair sustain these high levels?
- Manufacturing PMIs: Monday, Spain at 7:15, Italy 7:45, final French at 7:50, final German at 7:55 and final euro-zone at 8:00. The flash figures for France, Germany and the euro-zone fell short of expectations. The figures from Spain and Italy could help shape the final number for the euro-zone, which is also composed of updated numbers for the bigger countries. Spain enjoyed a score of 54.3 points in March, significantly above the 50 point mark separating growth from contraction. 54.6 is expected now. Italy had a lower score of 53.3 points and a marginal rise is on the cards. France’s initial number for April reflected contraction at 48.4 points while Germany and the euro-zone at large had the same score: 51.9 points, reflecting slow growth. These last 3 numbers will probably be confirmed.
- Sentix Investor Confidence: Monday, 8:30. This 2800 strong business survey has been advancing in recent months, hitting 20 points in April, the best since mid-2007. A small slide to 19.5 is on the cards.
- Spanish Unemployment Change: Tuesday, 7:00. The zone’s fourth largest economy suffers from one of the worst unemployment rates, with little improvement, as we’ve recently learnt. The monthly level of jobless claims is heavily influenced by the tourism sector. After a drop of 60K in the number of unemployed in March, another significant drop is on the cards: 64.8K.
- EU Economic Forecasts: Tuesday, 9:00. The European Commission releases economic forecasts three times per year. After upgrades from the German government and the ECB, we can expect an upgrade to the 2015 and 2016 forecasts from the EC as well. A small upgrade or no upgrade at all would be worrying for the euro.
- PPI: Tuesday, 9:00. Producer prices also feed into the calculations of the ECB, as they are related to headline CPI. After a jump of 0.5% in prices in February, a smaller rise is on the cards for March: +0.3%.
- Services PMIs: Wednesday: Spain at 7:15, Italy 7:45, final French at 7:50, final German at 7:55 and final euro-zone at 8:00. The services sectors are doing better than the manufacturing ones across the continent. Spain enjoyed strong growth in March, with 57.3 points and 57.4 is predicted now. Italy was far behind with 51.6 and a rise to 52.1 is expected. France’s initial number for April stood on 50.8 points, while Germany had 54.4 points. The euro-zone as a whole received an initial score of 53.7 points. The preliminary numbers for France, Germany and the euro-will be probably be confirmed now.
- Retail Sales: Wednesday, 9:00. After 4 consecutive months of rises, the volume of sales fell by 0.2% in February. The German number, which is already out, gives us an indication about the number for March: a slide of 0.4% is on the cards.
- German Factory Orders: Thursday, 6:00. Germany suffered two consecutive drops in orders in the wake of he new year. However, it is important to note that this indicator is extremely volatile. A bounce back is expected for the month of March: +1.6%.
- French Industrial Production: Thursday, 6:45. Industrial output in the zone’s second largest economy remained unchanged in February after two consecutive rises. No big changes are on the cards, only a small rise of 0.1% At the same time, French trade balance is also likely to remain around a deficit of 3.4 billion euros or rising to 3.5 billion.
- Retail PMI: Thursday, 8:10. According to this purchasing managers’ indicator, the retail sector is still contracting with a score of 48.6 in March. A small advance could be seen for April.
- German Industrial Production: Friday, 6:00. Contrary to factory orders, industrial output has actually risen in February with a moderate +0.2%. Another small tick up is on the cards for March: +0.4%.
- German Trade Balance: Friday, 6:00. Germany’s wide surplus, thanks to its vast exports, is one of the things pumping up the euro. A positive figure of 19.7 billion was seen in February, and the surplus could exceed 20 billion this time with 20.3 billion.
* All times are GMT
EUR/USD Forecast May 11-15
EUR/USD moved up to new highs, but shed the gains in a volatile week. The upcoming week features yet another chapter in the Greek drama as well as important GDP data . Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Data in the euro-zone was mixed, with OK PMIs but weak German industrial data. The boost for the euro came from a sell-off in German bunds, that triggered a squeeze on euro shorts. In the US, the big trade deficit raised speculation for a contraction in Q1. Also the weak ADP report weighed heavily on the greenback. This sent EUR/USD to highs last seen in February, but the move did not last too long. The mixed NFP report in the US eventually pushed the pair lower, to close with only a small weekly gain.
- Eurogroup meetings on Greece: Monday. May 11th was a yet another deadline for Greece and its creditors to reach a deal on, but this seems unlikely at the moment. Low expectations mean that if a deal is reached it could be positive for the euro. There has been some optimism recently.
- German WPI: Monday, 6:00. The Wholesale Price Index also feeds into the general inflation figures and impacts the final CPI. After a rise of 1% in March, a smaller 0.4% m/m gain is on the cards for April.
- GDP data: Wednesday: France at 5:30, Germany at 6:00, Italy at 8:00 and the whole euro-zone at 9:00. We will now learn if growth has indeed picked up in Q1, as the weak euro may have contributed to exports. Starting with France, the second largest economy grew by only 0.1% in Q4 2014, continuing the path of hardly seeing any growth. We are now expecting +0.4% for Q1 2015. The zone’s locomotive, Germany enjoyed a very strong growth rate of 0.7% in Q4, and could lead growth once again by advancing 0.5% q/q. The zone’s third largest economy, Italy saw no growth after three consecutive quarters of contraction. Also here, we are now expecting positive growth of 0.2%. The euro-zone as a whole, enjoyed a better than expected growth rate of 0.3%, powered by Germany, but is still fragile. A wider advance, built on the three largest economies and Spain’s strong 0.9% growth rate (already reported earlier) is expected now: +0.5% Note that the German release has the biggest impact, but also the initial publication from France tends to move the dial.
- German Final CPI: Wednesday, 6:00. The initial number for April came out at -0.1% m/m, better than expected. This will probably be confirmed now.
- French Non-Farm Payrolls: Wednesday, 6:45. The second largest economy in the zone has seen no change to employment levels in Q4 and another month of stagnation is on the cards. The country is still struggling with unemployment, as jobless seekers remain at high levels. Note that at the same time, the country also releases CPI data, which rose 0.7% in March and is expected to rise 0.2% in April.
- Industrial Production: Wednesday, 9:00. After Germany disappointed with its numbers, we can expect the euro-zone figures to almost reach a standstill in March after rising 1.1% in February. +0.1% is expected.
- ECB Meeting Minutes: Wednesday, 11:30. In the recent meeting, the European Central Bank left policy unchanged. Draghi showed determination in implementing QE despite the recent improvement. We will now see what the different members talked about in the meeting, and if there was pressure from some German members to exit the QE program, something that seems unlikely now.
* All times are GMT
EUR/USD Forecast May 18-22
EUR/USD was was initially pressured to the downside but then reached new highs in another volatile week. What’s next for the pair? Forward looking indicators stand out now. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Euro-zone GDP figures were mixed, with stronger than expected numbers from France and Italy but slower growth from Germany that eventually led to a small miss in the overall growth numbers. Draghi dragged the currency down once again by reiterating that QE will be fully implemented. But the pair has two sides and yet another disappointing retail sales report hit the dollar hard. Better than expected jobless claims and other figures only partially compensated.
- Bundesbank Monthly Report: Monday, 8:00. The German central bank publishes a monthly assessment of the current and future situation of the euro-zone largest economy. Projections about growth, employment and inflation shape the decisions of politicians and also of the ECB.
- German ZEW Economic Sentiment: Tuesday, 9:00. This 275 strong survey is published early in the month and tends to have a significant impact. After long months of rises, we have seen a slide in business confidence in April, with economic sentiment scoring 53.3 points. Another tick down is on the cards to 50.1 points. The all-European number is also expected to slide from 64.8 points seen last month to 62.4 now.
- Final CPI: Tuesday, 9:00. According to the initial publication, prices in the euro-zone remained flat in April, while core inflation remained at 0.6%. The road to the ECB’s 2% or a bit below mandate is still long. A confirmation of these figures is expected.
- Trade Balance: Tuesday, 9:00. The euro-zone enjoys a surplus in its balance of trade, driven at large by German exports. After a whopping +22 billion in February, a similar number is on the cards for March: 23.2 billion.
- German PPI: Wednesday, 6:00. Producer prices also feed into the mix of inflation data. A rise of 0.1% was seen in March and a repeat of this figure is on the cards for April.
- Flash PMIs: Thursday: France at 7:00, Germany at 7:30 and the whole euro-zone at 8:00. In April, Markit’s purchasing managers’ indicators have shown a mixed picture for France, Europe’s second largest economy. Manufacturing PMI has scored 48 points, below the 50 point threshold separating growth and contraction. An advance to 48.6 points is now expected. Services has been positive, with 51.4 points and is now poised for 52 points. Germany has seen better numbers, with manufacturing at 52.1 and 54 for services. These are now expected to slide to 51.9 and 53.9 respectively The whole euro zone had similar numbers to Germany: 52 in manufacturing which is now predicted to hit 51.8 and 54.1 in services, which could edge down to 53.9.
- Current Account: Thursday, 8:00. Similar to the trade balance numbers, the euro area enjoys a significant surplus of 26.4 billion in the latest figure for February. A slight decrease could be seen now to 24.3 billion. This surplus keeps the euro bid.
- ECB Meeting Minutes: Thursday, 11:30. Postponed from the previous week. In the last rate decision held back in mid April, Draghi brushed off speculation about an early end to the QE program and sounded determined. The minutes could reveal differences between German members and others, and also show what the Governing Council thinks about the recovery: is it gaining ground or is it still fragile?
- Consumer Confidence: Thursday, 14:00. The official survey of 2000 consumers has shown a renewed deterioration of confidence after quite a few months of improvement. The figure for March stood on -5 points, down from -4. The negative number reflects pessimism. Nevertheless, this is the best result since 2007. The same result is on the cards now.
- German Final GDP: Friday, 6:00. The final assessment of Q1 GDP is expected to confirm the initial print of +0.3% growth. The numbers are rarely modified for the zone’s powerhouse.
- Mario Draghi talks: Thursday, 17:30, Friday 8:00. The European Central Bank convenes in Sintra and president Mario Draghi gives the opening remarks on Thursday and another speech on Friday. Later on Friday, Draghi will participate in a panel, As the conference focuses on employment and inflation, market sensitive topics, we could certainly hear some market moving comments, as we heard recently. Will Draghi hit the euro again?
- German Ifo Business Climate: Friday, 8:00. IFO is considered Germany’s No. 1 think-tank. Despite being released after the ZEW figure, IFO’s publication carries a lot of weight. As expected, IFO’s number ticked up to 108.6 points in April. A small drop is likely for the month of May to 108.3 points.
EUR/USD Forecast May 25-29
EUR/USD changed course and fell in a week that saw central bank pressure from both sides. What lies on the road ahead? Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Data in the euro-zone did not impress, with mixed PMIs and a slide in German confidence. But the trigger came from the central bank: ECB member Coeure hit the euro with talk about front-loading QE before the summer among other dovish comments. In the US, better than expected building data and still having the June hike option on the table helped the greenback recover against other currencies. Can the pair continue?
- German GfK Consumer Climate: Wednesday, 6:00. According to this measure, consumers in Germany are becoming more confident, with the score hitting 10.1 points in April. A minor slide to 10 points is expected now.
- ECB Financial Stability Report: Wednesday, 10:00. The European Central Bank releases this report twice per year and could use the opportunity to show if the QE program helped stability in its opinion.
- Belgian NBB Business Climate: Despite coming from a small country, this survey is highly regarded. In April, business climate fell to -6.2, below expectations. A small advance to -5.8 is on the cards. The negative number reflects worsening expectations.
- German Import Prices: Wednesday, 13:00. Prices of imported good also affect the inflation reads, especially when coming from the largest country. After a rise of 1% last time, a slower gain of 0.5% is on the cards now.
- German Retail Sales: Friday, 6:00. This important measure dropped sharply in March, by 2.3%. Consumers might have been affected by the Easter holiday. A rebound could be seen now.
- French Consumer Spending: Friday, 6:45. Spending dropped by 0.6% in the continent’s second largest economy in March. A bounce back with +0.4% is on the cards now.
- Spanish Flash CPI: Friday, 7:00. The zone’s fourth largest economy is one of the first to release inflation numbers, and its high deflation has also gained traction. After a y/y drop of 0.6% in April, a slide of 0.5% is on the cards for May.
- ECB Lending data: Friday, 8:00. The ECB’s monetary stimulus is finally having a real impact. After long months of negative numbers, private loans have finally returned to growth territory, with a y/y rise of 0.1% in March. A gain of 0.4% is expected now for April. M3 Money Supply, or the money in circulation, is also on the move with 4.6% in March and expectations for +4.9% in April.
* All times are GMT
EUR/USD Forecast June 8-12
EUR/USD managed to shoot higher and crash back down in a very exciting week with multiple themes at play Industrial output data and other figures will accompany echoes from the ECB. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Euro-zone data was relatively upbeat, with better service PMIs, solid retail sales and a lower unemployment rate. In the ECB press conference Draghi tried not to rock the boat. With no big change in forecasts, no front loading and no worries about volatility, the euro reacted positively and rallied higher. In the US, data was not convincing enough and that also supported the rise of the pair. Yet as the Greek crisis escalated and especially as the US enjoyed an excellent gain in jobs that sent the pair significantly lower.
- German Industrial Production: Monday, 6:00. The continent’s locomotive has seen industrial output slide by 0.5% in March, falling short of expectations. A bounce back is likely for April: +0.6%.
- German Trade Balance: Monday, 6:00. The large surplus that Germany commands is one of the reasons keeping the euro bid also in times of trouble. After a positive 19.3 billion in March, a small slide could be seen for April to 18.9 billion.
- Sentix Investor Confidence: Monday, 8:30. This 2800 strong survey dropped to 19.6 points in May, but maintained the high levels it gradually advanced to. A similar number could be seen for June.
- Revised GDP: The preliminary read of euro-zone GDP showed a growth rate of 0.4% in Q1 2015. This was stronger than previous quarters but still left many unconvinced about the sustainability of the recovery. This number will probably be confirmed now.
- French Industrial Production: Wednesday, 6:45. The euro-zone’s second largest economy saw a slide of 0.3% in industrial output back in March, similar to its neighbor. A rise is on the cards now: +0.3%.
- French Final Non-Farm Payrolls: Thursday, 5:30. This broad quarterly measure has been quite stagnant in recent quarters, sliding by 0.1% in Q4. No big changes are expected now, with the lagging data for Q1: another fall of 0.1% is on the cards.
- French CPI: Thursday, 6:45. Inflation has been on the rise in several euro-zone countries. Will France see the same trend? The figure feeds into the final CPI report. After a rise of 0.1% in April, another rise is on the cards for May: +0.3%.
- Industrial Production: Friday, 9:00. While this indicator is released after the German and French publications, it still tends to surprise and move the euro. A slide of 0.3% was seen in March and a recovery could be seen now. Expectations stand on +0.4%.
* All times are GMT
EUR/USD Forecast June 15-19
EUR/USD had another busy week, with Greece playing an increasing role in shaping the direction. An important German survey and inflation numbers stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
German industrial output beat expectations and was one of the reasons for the positive start for the pair, together with rising German yields. However, then Greece took over. Optimism about a German compromise on a deal helped only temporarily, and things worsened quite quickly, with yet another deadlock. Greece seems to have leverage. The euro was also hit by German Chancellor Merkel, that indirectly complained about the currency’s strength. The pair was indeed capped at a double top. In the US, data was generally upbeat, but traders were hesitant to buy the greenback ahead of the Fed.
- Jens Weidmann talks: Monday, 7:00. The president of the German Bundesbank speaks in Frankfurt and it will be interesting to hear his comments on various fronts: on the state of the German economy, on Merkel’s backing of the ECB’s QE program, which Weidmann doesn’t really like and on Greece of course.
- Trade Balance: Monday, 9:00. The euro-zone enjoys a surplus in its balance, mostly thanks to German exports. After a positive number of 19.7 billion back in March, a slightly stronger figure is on the cards for April: 20.3 billion.
- Mario Draghi testifies: Monday, 13:00. The president of the ECB goes to Brussels to testify on monetary policy. The long time between now and the next decision means that Draghi could feel free to talk about the ECB’s plans, front loading QE, volatility in the markets and the ECB’s growing commitments to Greece. A repeat of his determination to push forward with QE despite improving conditions could weigh on the euro. However, in his last major appearance he was relaxed on volatility, and basically allowed the euro to rally.
- German Final CPI: Tuesday, 6:00. The initial read for May showed a rise of 0.1% in prices m/m. This contributed to the overall beat in euro-zone data. The number will likely be confirmed now.
- German ZEW Economic Sentiment: Tuesday, 9:00. This early survey dropped for the second month in a row in May, and with a bigger than expected fall to 41.9 points. The positive sign before the number still indicates optimism, but it is off he highs. A small drop to 38.6 points is on the cards for June. The all-European number could slide from 61.2 points seen in May to 60.3 now.
- Euro-zone Employment Change: Tuesday, 9:00. While a lagging figure, the employment change release provides a wide look at trends. An advance of 0.1% was seen in Q4 2014 and a repeat could be recorded for Q1.
- Final CPI: Wednesday, 9:00. The initial inflation figures came out better than expected: 0.3% in headline inflation and +0.9% in core inflation, the latter being more surprising. The figures helped the euro and also raised some speculation about an early end to QE, something that was repeatedly rejected. A confirmation of the data is expected, but revisions are quite common.
- Eurogroup and ECOFIN meetings on Greece: Thursday and Friday. These are scheduled meetings of the euro-zone finance ministers and then a meeting of all 28 EU members. Thursday’s meeting is currently seen as the “last deadline” in order to approve a deal for Greece. The current program expires on June 30th, which is also the date that the debt stricken country has to pay its “bundled” IMF loans. And, it doesn’t have the money to do so. While negotiations are going on all the time, including on weekends, the official meeting on Thursday is a climax, and it could be dragged into Friday as well. More: Why Greece currently has leverage over all troika members
- ECB Economic Bulletin: Thursday, 8:00. This report by the central bank is what the Governing Council members saw before making their decision in June – a decision that was characterized by the lack of worries about higher bond volatility. An insight into these figures usually repeats what we have already heard from Draghi, but could also contain some interesting observations about the economy.
- TLTRO: Thursday, 9:15. TLTRO means targeted loans: cheap money the ECB lends to commercial banks on the condition they lend the money to the real economy. The first auction in September resulted in €82.6 billion, the second one in December yielded €129.8 billion and the last one came out at €97.8 billion in March. A high value of loans means more liquidity and a lower need to buy bonds. It also means more economic activity. The determination of the ECB to keep on buying bonds makes the publication somewhat less important than it used to be, but it should still shake the common currency a bit.
- German PPI: Friday, 6:00. Producer prices advanced 0.1% in March, and a slightly stronger number is on the cards for April: +0.2%. Similar to the WPI, also the PPI feeds into future inflation numbers.
- Current Account: Friday, 8:00. As with the trade balance indicator, the wider current account figure, which also consists of other flows, is positive. However, the last two releases were somewhat disappointing. After 18.6 billion in March, a similar figure of 18.6 billion is predicted for April.
* All times are GMT
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EUR/USD Forecast June 22-26
EUR/USD had a tense week around the Greek crisis and the dovish message from the Fed. Can the rally continue? Flash PMIs and another German survey stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
The Greek crisis got closer to the edge in a week that saw heightened rhetoric across the old continent. Germany’s ZEW indicator disappointed once again and Draghi left the stage to Greece and to his colleagues across the pond. In the US, economic data was mixed but the focus was naturally on the Fed, that was clearly dovish. With a lower dot plot, a slower pace of projected rate hike and a lack of confidence that the recovery is sustainable, the dollar tumbled down and EUR/USD breached the double top. A deterioration in the Greek crisis, which is into an emergency phase, sent the pair back down. Let’s start:
- Eurogroup and Leaders’ Summit on Greece: Monday at 13:00 for the Eurogroup, and leaders meet later. Negotiations are going on around the clock and they will reach a climax on Monday, when the leaders, including German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras meet. Will we have a last minute deal? That’s what usually happens in Europe, but the stakes are high and confidence is low. The meeting could continue into the night.
- Consumer Confidence: Monday, 14:00. This official survey of 2300 consumers fell short of predictions in April by slipping to -6 points. The trend of rising confidence has reversed for now and consumers remain pessimistic, as the negative number reflects. The same score of -6 is expected.
- Flash PMIs: Tuesday: France at 7:00, Germany at 7:30 and the whole euro-zone at 8:00. France, the continent’s second largest economy still had manufacturing in contraction territory as of May, with 49.4 points. For the services sector, the situation is better with a score above the 50 point growth / contraction barrier, at 52.8 points. The preliminary numbers for June are expected to stand at 50.1 and 52.5 respectively. Germany has seen manufacturing at 51.1 and services at 53 points and also here, manufacturing is predicted to advance to 51.5 points while services to tick down to 52.9 points. The all-European manufacturing PMI is predicted to slide from 52.2 to 52 points and services to slide from 53.8 to 53.7 points.
- ECB decision on Greek ELA: Wednesday. The European Central Bank is keeping Greek banks alive with the Emergency Liquidity Assistance. While Draghi would like to stay out of the political debate, he has the keys to a Grexit: without money flow from the ECB, Greece would eventually need its own currency. The amount of ELA, which has been growing hand in hand with the Greek capital flight, is also telling about the level of anxiety among Greeks. This is routine meeting that happens every Wednesday, and has become more important now.
- German Ifo Business Climate: Wednesday, 8:00. Germany’s No. 1 think tank showed stability in May, with business climate standing at 108.5 points. The 7000 strong survey is expected to tick down in the score for June, following the lead from the ZEW institute and stand at 108.2 points.
- Belgian NBB Business Climate: Wednesday, 13:00. The wide business survey from Belgium usually provides a good snapshot on the whole continent. An improvement was seen in May, with a rise to -4.9 points, still in negative ground reflecting worsening conditions. A score of -5.2 is on the cards now.
- German GfK Consumer Climate: Thursday, 6:00. This survey of 2000 consumers has been marching forward in recent months, reaching 10.2 points in May. This time, a slide from 10.2 to 10.1 now.
- German Import Prices: Friday, 6:00. The prices of imports eventually feed into the CPI. After a rise of 0.6% in April, a more moderate rise of 0.2% is on the cards for May.
- ECB monetary data: Friday, 8:00. The M3 Money Supply showed an acceleration in growth of money in circulation, all the way to 5.3% y/y. This shows that the ECB’s loose monetary policy is reaching the real economy. Also private loans have stopped contracting on a yearly basis, with 0% change in April. For the month of May, another improvement is on the cards.=, to 5.4% in money supply and +0.2% in private loans.
* All times are GMT
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EUR/USD Forecast June 29 – July 3 – Greek crisis reaches deadline
EUR/USD was watching Greece very carefully with contrasting news causing confusion. The story became more dramatic after markets closed with the announcement of post-deadline referendum. In the last and busy week of H2, we have important inflation numbers and PMIs. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
The reported breakthrough in the Greek crisis on Monday did not last long as the skies darkened on Wednesday and Thursday. New hopes for a deal on Friday still lacked a few key factors. The euro has been reacting to the headlines, but often falling on good news. One reason is the refocusing on monetary policy divergence, that favors the dollar, and the other is that the common currency has become a funding or even a “safe haven” currency. But, in case of a “Grexit” or a “Grexident”, it is clear that the euro would plunge that is already worrying some brokers. The most recent development was the announcement of a referendum on the rejected proposals. This is planned for after the deadline, assuming that the Eurogroup approves a temporary extension of the deadline, which seems unlikely as of Saturday at noon. Update: the Eurogroup historically decided without Greece to reject the extension.
- Greek crisis events: Eurogroup meeting on Saturday at 12:00 and ongoing talks all the time towards the June 30th deadline. This is when the current extension of the bailout expires, and also when Greece has to pay the IMF – payments it “bundled up” in early June. In the meantime, Greek banks lack cash and they depend on the now daily decision of the ECB. The ECB uses its Emergency Liquidity Assistance tool to lend money to the banks. In case of no deal during the weekend and no additional ELA, banks could remain shut on Monday. At the time of writing a 5 month extension was discussed, but things are extremely fluid. Markets would cheer any resolution that puts the topic to sleep, even if it is merely another can kicking exercise. More: 3 EUR Scenarios Our Greek Playbook – Morgan Stanley. And Greek crisis – all the updates in one place
- German CPI: Monday, during the morning with an all German publication at 12:00. Inflation is beginning to show signs of recovery from the lows. In May, prices beat expectations and CPI advanced 0.1% m/m, as oil prices stabilized in recent months. The initial number for June will likely show a rise of 0.2%.
- Spanish CPI: Monday, 7:00. The euro-zone’s fourth largest economy is one of the countries that suffered most from deflation, but this is beginning to wane off. After a y/y fall of 0.2% in May, we could see a better number in the preliminary read for June: -0.1% is on the cards.
- German Retail Sales: Tuesday, 6:00. The zone’s locomotive has enjoyed a big rise of 1.7% in the volume of sales in April,, but this may have been skewed by the Easter holiday. A modest rise of 0.3% is on the cards now.
- French Consumer Spending: Tuesday, 6:45. After a big fall in April, consumers in the continent’s second largest economy picked up spending in May with a rise of 0.1%. Another advance could be seen now, worth 0.3%.
- German Unemployment Change: Tuesday, 7:55. Unemployment is falling in the continent’s largest economy, but the drops have been smaller in recent months. After a drop of 6K unemployed in April, a similar number could be seen in May: -5K. The employment numbers have a political impact.
- Flash CPI: Tuesday, 9:00. After a long period of extremely low levels, core inflation finally picked up in May and reached 0.9% y/y. Headline inflation, which is the ECB’s target, stood on 0.3% y/y, and the numbers are still affected by the fall in oil prices. A moderation is expected now, with a 0.2% rise in CPI +0.8% in core CPI.
- Unemployment Rate: Tuesday, 9:00. Contrary to German unemployment, the situation in the broader continent are less encouraging. A level of 11.1% was recorded in April, a small improvement in comparison to previous months. No change is expected.
- Manufacturing PMIs: Wednesday morning: Spain at 7:15, Italy at 7:45, the final number for France at 7:50, final for Germany at 7:55 and the final all-European number at 8:00. Spain continued enjoying significant growth in May according to Markit’s indicator, with 55.8 points in the manufacturing sector. A slide to 55.6 is expected for June. Italy, the zone’s third largest economy, was a bit behind with 54.8 points in May and 55.2 is predicted now. The preliminary number for France showed 50.5 points in June, finally in growth territory. Germany enjoyed 51.9 points and for the whole euro-zone the number stood on 52.5 points. All three figures will likely be confirmed now.
- Spanish Unemployment Change: Thursday, 7:00. Spain suffers one of the highest unemployment rates in the euro-zone, but the monthly changes in the number of unemployed are encouraging, even if they are impacted by seasonal factors related to tourism. A drop of 118K was seen in May and another fall is on the cards for June.
- PPI: Thursday, 9:00. Producer prices dropped by 0.1% in April, worse than expected, and showing that a real pick up in inflation is still a long way coming. A small rise of 0.1% is estimated now.
- ECB Meeting Minutes: Thursday, 11:30. In the latest press conference, Draghi was quite calm on the QE program and saw no need to front-load bond buying or react to volatility. We will now get an inside view on the internal talks within the Governing Council. What do the members foresee for the rest of the year?
- Services PMIs: Friday morning: Spain at 7:15, Italy at 7:45, the final number for France at 7:50, final for Germany at 7:55 and the final all-European number at 8:00. In May, the 58.4 score for the Spanish services sector reflected very strong growth, standing out from the rest. Did this continue in June? A score of 58 is predicted. Italy saw modest growth at 52.5 points and 52.9 is on the cards now. The initial French number for June was upbeat with 54.1 points, Germany saw 54.2 and the whole euro-zone at 54.4 points. The last three numbers are expected to be confirmed in the final read.
- Retail Sales: Friday, 9:00. April saw a rebound in consumers’ activity, with a rise of 0.7% in the volume of sales, countering a drop of 0.6% seen in March. Despite being released after the German and French publications, the all-European figure has a significant impact. A rise of 0.2% is predicted now.
* All times are GMT
EUR/USD Forecast July 13-17
EUR/USD traded according to Greek headlines for another week, and managed to end it on a positive note, as a deal finally seems close. Apart from a potential end to the deep crisis, we will also hear from a key player in the crisis: the ECB, in its rate decision, among other events. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
The week began with another gap to the downside on the clear NO vote in the Greek referendum. From there we had another fill of the gap and tense trading as preparations were made for what seems as the real deadline: the EU Summit on Sunday. Pressure for debt restructuring mounted and eventually Greece submitted its proposals, which consisted of a capitulation on austerity but also a request for a longer plan, an investment plan and most importantly debt relief. This triggered a relief rally, but we need to be cautious before saying the story returns to the back burner. There are troubles in the talks during the weekend.
- Weekend talks on Greece: Eurogroup on Saturday and EU Summit on Sunday (could be cancelled) and tentative Eurogroup on Monday. As EU top official Donald Tusk described it, this may be the final deadline to reach a deal. With Greek austerity proposals basically bowing to the creditors’ demands, there is much optimism that a deal is indeed done. The Eurogroup’s blessing on Saturday could seal it. If not, there may be trouble. With an endorsement from France, the key remains in Merkel’s hands and the hot topic remains debt restructuring, as always. If she agrees, this would be a retreat for Germany, but if she refuses, Germany will find itself alone against France and the IMF (which will only sign a deal that consists of debt restructuring), showing that it only wanted Tsipras out and never negotiated in good will. Assuming a deal, we could get a small relief rally, as this is already priced in. If there is no deal, a big crash could occur.
- German Final CPI: Tuesday, 6:00. According to the preliminary release, prices dropped 0.1% m/m, worse than expected for the month of June. This will likely be confirmed in the final read.
- German ZEW Economic Sentiment: Tuesday, 9:00. This early report on business sentiment dropped to 31.5 points. The consecutive drops are worrying, but sentiment still remains positive. A small slide to 30.6 points is predicted for July, but given the Greek crisis, a bigger drop cannot be ruled out. The all European number carries expectation for a drop from 53.7 to 51.1 points.
- Industrial Production: Tuesday, 9:00. Output advanced by 0.1% in April. The figure for May is expected to show a gain of 0.2% in production, still a modest advance for the old continent.
- French CPI: Wednesday, 6:45. France has seen a rise of 0.2% in prices in May. A smaller rise of 0.1% is on the cards for June. This feeds into the final CPI.
- Final CPI: Thursday, 9:00. According to the preliminary numbers for June, headline inflation rose 0.2% in June while core inflation rose by 0.8%. These are weaker numbers than in May. No change from the initial estimates is expected.
- Trade Balance: Thursday, 9:00. The euro-zone enjoys a wide trade surplus, and this keeps the euro bid. Yet after a positive 24.3 billion figure in April, a slightly narrower figure is on the cards now: 22.3 billion.
- ECB rate decision: Thursday, 11:45 with the press conference at 12:30. The European Central Bank played a key role in the Greek crisis, basically forcing banks to shut down once negotiations broke down and Greece went to a referendum. This role will be questioned by reporters. For markets, perhaps the bigger focus is on plans regarding QE. Assuming a deal, will the ECB go all-in into Greek bonds? Will QE be expanded given the repercussions the crisis had on the continent? In addition, the assessment of the Bank on inflation and growth developments is also key, even though no forecasts are expected now.
* All times are GMT