EUR/USD Forecast Jan. 11-15
EUR/USD had a turbulent start to 2016, driven by sentiment more than anything else. What’s next? The ECB’s meeting minutes is the big event awaiting us.
It was a risk on / risk off week, with the euro enjoying the risk off sentiment, or gloomy mood, to rise against most currencies. It’s safe haven role was seen almost all the time, alongside the crash in Chinese and other stocks, the slide in oil and the various geopolitical scares. The one exception to the rule was when Inflation in the euro-zone fell short of expectations, risking more ECB action that could weaken the euro. In the US, the NFP report was excellent, but with the rate hike already behind us and the gloomy mood having control, it did little to cheer the dollar against the safe haven euro.
- Sentix Investor Confidence: Monday, 9:30. This survey of investors fell short of expectations in December with a slide to 15.7 points. Will the recent gloomy market mood push it even further down? A score of only 11.5 is on the cards now.
- French CPI: Wednesday, 7:45. Prices in France dropped by 0.2% in November. After the disappointing figures from Germany we can expect more pressure from the second largest economy. A small rise of 0.1% is predicted.
- Industrial Production: Wednesday, 10:00. Industrial output in the euro-zone advanced by 0.6% in October. Despite the lagging release, this figure is watched. A drop of 0.2% is expected.
- German WPI: Thursday, 7:00. The Wholesale Price Index is yet another measure of inflation. After a drop of 0.2% in November, another slide is likely.
- Eurogroup meetings: Thursday. Finance ministers of the euro-zone convene for the first time in 2016 amid an expectation for countries to miss their deficit targets, and it’s not only Greece. Germany is spending on refugee accommodation, France on security and other countries such as Italy seem impatient with austerity. Will 2016 mark the end of austerity?
- ECB Meeting Minutes: Thursday, 9:00. These are the minutes from the December meeting in which Draghi disappointed. The ECB did cut the deposit rate by 10bp and announced an extension of the QE program as well as reinvesting proceeds, but this didn’t meet investors’ expectations, which were basically fueled by Draghi himself. Some reports claimed that he was not able to do more due to internal opposition. We’ll now learn how significant it was and in addition, see if inflation forecasts meet reality.
- Trade Balance: Friday, 10:00. The euro-zone enjoys a trade surplus, most prominently thanks to German exports. In the month of October, this surplus slipped to 19.9 billion, and it could be similar now.
* All times are GMT