EUR USD Weekly Outlook

[Samirofi]

Euro/USD Forecast for February 24-28


During last week, the US dollar slightly depreciated again against the Euro. This week several reports will come out and may affect the forex markets especially the Euro USD for the week of February 24th to February 28th; these include: EU economic outlook, U.S new and pending home sales, U.S GDP for the fourth quarter, EU’s employment report, EU monetary development, and U.S consumer confidence.


(All times GMT):


Monday, February 24^th

09:00 – German Ifo Business Climate: This index comprises of the shifts (on a monthly basis) in the manufacturers, builders, wholesalers, and retailers in Germany as of February. In the last report regarding January 2014, the business climate index slightly increased again to 110.6;
10:00 – EU CPI: Based on the recent report, the CPI slightly fell to an annual rate of 0.8% during December. The changes in EU’s inflation could affect ECB’s monetary policy and the Euro/USD;


Tuesday, February 25^th

10:00 – EU Economic Forecast: The European Commission will issue its quarterly outlook report for the EU economy;
15:00 – U.S Consumer Confidence: According to the last update for January, the consumer confidence index increased to 80.7 (month-over-month). The current expectations are that the February index may rise again; this report might affect the Euro/USD;


Wednesday, February 26^th

09:00 – Gfk German Consumer Climate Survey: This survey estimates Germany’s consumers’ economic climate (past and future economic conditions – on a monthly basis) for February. In the previous report for January 2014, the climate index rose to 8.2;
15:00 – U.S. New Home Sales: This report will refer to January 2014; in the previous report (opens pdf; for December), the sales of new homes fell to an annual rate of 414,000 – a 10% drop (month-over-month); if the number of home sales keep falling, this may suggest the housing market in the U.S is cooling down; this news may also affect theEuro/USD;


Thursday, February 27^th

09:00 – Euro Area Monetary Development: This monthly report will pertain to the developments of the M3, M1 and loans to private sector in the Euro area as of January 2014. In the latest December report, the annual growth rate for M3 fell to 1%; M1 declined to 5.8%. Finally, the annual growth rate of loans to private sector remained at -2.3%. This news suggests the EU inflation is falling again as loans continue to shrink and the growth rate of M1 and M3 declines. The progress of the EU monetary base is likely to affect future ECB rate decisions;
13:30 – U.S Core Durable Goods: As of December 2013, new orders of manufactured durable goods decreased to $229.3 billion;
13:30 – U.S. Jobless Claims Weekly update: This weekly report will refer to the developments in the initial jobless claims for the week ending on February 21^st; in the recent report the jobless claims fell by 3k to reach 336k; this next weekly report may affect the U.S dollar;


Friday, February 28^th

08:00 – KOF Economic Barometer: This monthly report estimates the developments in the Swiss economy in the upcoming months;
10:00 – German Retail Sales: This monthly report will refer to January 2014. In the recent report, the volume of retail trade fell by 2.5% during December;
10:00 – EU CPI Flash Estimate: This index calculates the annual consumer price index of the Euro Area. According to last estimate for January, the annual CPI reached 0.7%, which is still well below the ECB’s target inflation of 2%. If the inflation rate keeps falling, this could indicate the EU economy is shrinking. These developments could influence the ECB members with respect to ECB’s cash rate decision next week;
10:00 – EU Unemployment Rate: Last month’s report showed that the rate of unemployment remained inched down to 12%. The rate remained high and around 12% throughout 2013. If the rate of unemployment remains high, it could adversely affect the Euro;
13:30 – Second U.S GDP 4Q 2013 Estimate: This will be the second estimate of U.S’s fourth quarter 2013 real GDP growth. In the early estimate, the U.S GDP grew by 3.2% in the fourth quarter of 2013. In the third quarter the GDP grew by 4.1%;
15:00 – U.S Pending Home Sales: This report presents the developments in pending home sales in the U.S during January; in the previous update for December, pending home sales index plunged by 8.7% (month-over-month). This report is another signal for the progress in the U.S housing market; if the index falls again, it may drag down the U.S dollar;

[Samirofi]

Euro/USD Forecast for August 11-15

ECB President Mario Draghi gave a little for everybody in his press conference: on one hand, he continued seeing inflation returning back to course and was not worried about growth, that looks weak in his country, Italy. On the other hand, he did stress that preparations are intensifying towards a QE program and also explained why EUR/USD should fall. The euro also suffered from weak German industrial numbers and fear of the recent escalation in relations with Russia. In the US, a solid services PMI and encouraging jobless claims numbers supported the USD. However, yet again we have seen profit taking on the greenback late in the week

1. German ZEW Economic Sentiment: Tuesday 9:00. German investor and analyst climate declined in July for a seventh straight month reaching 27.1 from 29.8 in June. This was the lowest reading since December 2012, amid political tensions in the Middle East. Analysts expected sentiment to reach 28.9. ZEW President Clemens Fuest stated Germany’s economic activity over went a “slight dent” but the medium-term economic outlook remains positive. German investor sentiment is expected to worsen to18.2.
2. ZEW Economic Sentiment: Tuesday 9:00. The euro zone, the ZEW economic sentiment index edged up to 61.8 in July, from a reading of 58.4 in June, lower than the 62.3 points reading estimated by analysts. Despite this rise, there still remains a deteriorating perception on the strength of the Eurozone’s recovery. Inflation remains low while recent manufacturing and industrial production numbers have disappointed across the board. The Euro area economic sentiment is expected to decline to 41.3.
3. German Final CPI: Wednesday, 6:00. German CPI flash estimate remained unchanged in the final data for the month, rising 0.3%. The annual inflation rate increased to 1.0% slightly better the in the previous month. However the rate in inflation remains too low for comfort. German final CPI is expected to remain at 0.3%.
4. French CPI: Wednesday, 6:45. In June 2014, the Consumer Prices remained unchanged for the third consecutive month, rising 0.5% in the year to June 2014, down from 0.7% in April and May 2014. Overall, in June, the decline in manufactured product prices was offset by an increase in services prices. Moreover, prices of food and those of energy declined in June 2014. French CPI is predicted to decline 0.2%.
5. Industrial Production: Wednesday, 9:00. Industrial output in the Eurozone declined 1.1% in May, after posting a 0.7% gain in April. Analysts expected a 0.3% rise in May. On a yearly base, factory gate output expanded by 0.5%, in line with market forecast, after a 1.4% increase in April. This decline highlights the fragile state of the Eurozone’s recovery. Industrial production in the Eurozone is expected to rise 0.5% this time.
6. GDP data: Thursday. The Eurozone economy expanded mildly in the first quarter, building expectations for drastic move from the European Central Bank. Output advanced 0.2% after a 0.3% rise in the previous quarter. The reading was worse than the 0.4% growth rate forecasted by analysts. French flat growth rate was the major blame for the weak expansion in the Euro area. France failed to execute economic reforms which helped other Euro member countries. The Eurozone 0.2% growth was attributed to the 0.8% expansion in Germany and the 0.4% increase in Spanish GDP. France is expected to post a 0.1% growth rate, Germany’s economy is expected to contract 0.1%, and the Eurozone is expected to register a growth rate of 0.4%.
7. French Non-Farm Payrolls: Thursday, 6:45. French non-farm payrolls, dropped 0.1% in the first quarter, in line with market forecast. NFP advanced 0.1% in the last quarter of 2013. Goods-producing industries declined 0.3%, construction sector dropped 0.4%and services edged down 0.1%. French non-farm payrolls is expected to decline 0.1% this time.
8. ECB Monthly Bulletin: Thursday, 8:00. The European Central Bank said in its July monthly bulletin release that measures taken in June are expected to raise the inflation rate to around 2%. Furthermore, the Central bank is ready to take “unconventional measures” if required, to boost economic growth while maintaining rates at historic lows for a long period of time. Bigger lines of credit will help smaller businesses to recuperate in the second quarter.
9. Inflation data: Thursday, 9:00 According to the flash estimate, euro zone inflation dug even lower, to 0.4%. A sharp decline in food and phone calls offset more expensive tobacco and restaurants. The annual inflation is far below the 2.0% target. Consumer prices fell in quite a few countries. Core annual inflation excluding the volatile prices of energy and unprocessed food reached 0.8%, unchanged from the previous month. These numbers will likely be confirmed now.

* All times are GMT

[Samirofi]

Euro/USD Forecast for August 18-22

EUR/USD saw a new slide once again. but did not really make a substantial move. The focus is on the PMIs and on Mario Draghi speech in Jackson Hole. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD.


The Eurozone releases showed a stall in the euro area recovery with poor economic climate and sluggish growth in the second quarter. Germany’s ZEW economic sentiment plunged to 8.6 points from 27.1 in July, well below market forecast of 18.2 points, and the Current condition index fell to 44.3, indicating geopolitical tensions halt expansion in Germany. Furthermore, the Eurozone economies fail to generate real growth. Germany, the leading force in the euro area contracted 0.2% in the second quarter, according to preliminary GDP estimates, the first contraction in the German economy since Q4 of 2012. Likewise France economy remained flat form the first quarter. Will this trend continue?

Updates:

• Aug 18, 12:45: EUR/USD Aug. 18 – Clings to 1.34 as Fed focused week begins: EUR/USD starts another week in August with slow trading around the 1.34 level. We have seen the pair slide for several...
• Aug 18, 12:28: EUR/USD in a triangle – Elliott Wave Analysis: Interestingly, despite some interesting swings on stocks, the FX market remains in corrective mode. On EURUSD we still see a...
• Aug 18, 11:19: EUR/AUD On Verge Of A Major Breakdown: The Euro is trading lower against many major currencies, including the Australian dollar. The German and French GDP data were...
• Aug 18, 10:20: Monitoring Sterling Volatility: A calmer tone has emerged in the past few sessions that suggests the second half of the month could prove...
• Aug 18, 7:21: EUR/USD to lose 1.30 by year end?: So both German and Italian GDP growth contracted 0.2% in Q2. Investment and construction are weak but the conventional wisdom...
• Aug 18, 0:12: EUR/CAD remains at risk: Technical Bias: Bearish Key Takeaways • Euro is trading lower against the Canadian dollar, as the Euro bears take control....

1. Trade Balance: Monday, 9:00. The euro zone’s trade surplus widened less-than-expected in May, reaching €15.3 billion from a surplus of €15.2 billion in April. Exports climbed to €160.5 billion in May, from €159.6 billion in April, and imports increased to €145.2 billion, from €144.4 billion in the preceding month. On an unadjusted basis, the surplus remained at EUR 15.4 billion. The trade surplus is expected to narrow to14.98 billion.
2. Current Account: Tuesday, 8:00. The Eurozone current account surplus declined in May to a seasonally adjusted EUR 19.5 billion from EUR 21.6 billion in April. The surplus products declined to EUR 13.8 billion from EUR 16.9 billion in the previous month. Meanwhile, the surplus on services edged up to EUR 13 billion from EUR 10 billion. Income narrowed sharply to EUR 1.7 billion from EUR 5.4 billion. However, the deficit in current transfers narrowed to EUR 8.9 billion from EUR 10.7 billion. The Eurozone current account surplus is expected to widen to 21.3 billion this time.
3. German PPI: Wednesday, 6:00. German producer prices dropped again in June, however at a slower pace. Producer prices declined 0.7%, following 0.8% drop in May, in line with market forecast. Energy prices continued to fall, dropping 2.4% in June. While, prices of commodities edged up 1.3% and prices of consumer goods and capital goods increased 0.9% and 0.5%, respectively. On a monthly base, producer prices remained unchanged in June, after the 0.2% fall in May. German producer prices are forecasted to rise 0.1%.
4. Manufacturing and Services PMIs: Thursday. The Eurozone’s economic recovery rebounded slowly in July, driven by Germany and the services sector. However the crisis in Ukraine is a big concern for companies, making it hard to commit to new purchases, investment and hiring. The Eurozone services sector expanded to 54.4 from 52.8, reaching its highest level in more than three years. However, despite the rebound in services the sector, companies did not expand their workforces, while continuing to cut their selling prices. Meanwhile the euro area manufacturing sector inched higher to 51.9 from 51.8 in June. Germany continued to strengthen with a sharp expansion in the services sector, rising at the fastest pace in more than three years, reaching 56.6, gaining 2 points from June. However the Ukraine situation poses a major risk on future prospects. German manufacturing also improved, rising to 52.9 form 52 in the prior month. France remained the weak link among the largest economies in the euro area. Private-sector activity in July rose to 50.4 from 48.2 in June, reaching expansion. But the manufacturing PMI fell to 47.6 from 48.2 to reach a seven-month low. Except for the rise in the Eurozone’s services sector, the general tone continued to be gloomy, with new orders falling for the fourth straight month, while employment fell for the ninth straight month. French Manufacturing is expected to improve to 47.9, while services is expected to reach 50.3, German Manufacturing is expected to drop to 51.8, and Services to 55.5, Eurozone Manufacturing is expected to decline to 51.4, and Services to 53.6.
5. Consumer Confidence: Thursday, 14:00. Consumer sentiment in the euro zone plunged below expectations in July, falling to -8.4 from a revised -7.5 in June. Analysts expected the index to rise to -6. The sharp decline raises concerns over the Euro-area’s economic recovery. The chief concern is the conflict in eastern Ukraine, where separatists backed by Russia are fighting government forces. As a result the Eurozone considers imposing economic sanctions on Russia, a leading economy in the Europe. Such measures could endanger the euro zone economic recovery. A Consumer sentiment is expected to drop further to -9.
6. Mario Draghi speaks: Friday, 18:30. European Central Bank head Mario Draghi will follow Federal Reserve Chair Janet Yellen’s speech at the Jackson Hole Symposium and talk about employment issues. Market volatility is expected especially as the new data, especially GDP is certainly worrying. Could Draghi up the ante on the chance of QE?

* All times are GMT

[Samirofi]

Euro/USD Forecast for September 22-26

EUR/USD failed to recover, and eventually fell to a new 14 month low. Is this the pair set to continue declining? A speech by Mario Draghi, PMIs and an important German survey are the highlights. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD, now on lower ground.


The first installment of the ECB’s targeted loans (TLTROs) received a lukewarm reception, with a take up of only €82.6 billion. This was below all estimates and suggests that the ECB might have to implement a large ABS program or outright QE. The central bank can be marginally encouraged by an upwards revision in August’s headline inflation to 0.4%. However, business confidence dropped once again in Germany. In the US, the Fed kept its language regarding interest rates unchanged, but did lay out guidelines for exiting the stimulus and it now sees higher rates in 2015 on average. This gave a big boost to the dollar. Can this monetary policy convergence continue weighing on the euro?

1. Mario Draghi talks: Monday, 13:00. The president of the ECB goes to the European Parliament to testify. An updated assessment of the economy and inflation is likely to raise interest, as well as the ECB’s latest measures. Any optimism will lift the euro while pessimism is set to hurt it. Hints about further monetary stimulus will rock the markets, especially after the recent rate cuts and the ABS announcement.
2. Consumer Confidence: Monday, 14:00. This official survey of around 2300 consumers fell to -10 points, reflecting growing pessimism – the worst since the beginning of the year. Another fall to -11 points is expected now.
3. Flash PMIs: Tuesday: 7:00 in France, 7:30 in Germany and 8:00 for the whole euro-zone. The forward looking purchasing managers’ indices for September are expected to remain similar to last month’s numbers: contraction in French manufacturing (from 46.9 in August to 47.1 expected now), hardly growing French services (50.3 to 50.2), weak German manufacturing growth (51.4 to 51.3 points), solid German services (54.9 to 54.6), weak euro-zone manufacturing growth (50.7 to 50.6) and OK euro-zone services growth (53.1 points in August to 53.2 points now). The French and German figures have the strongest impact.
4. German Ifo Business Climate: Wednesday, 8:00. Like the ZEW indicator, also IFO, Germany’s No. 1 think-tank, is showing an erosion in business confidence. The 7000 strong survey is predicted to show a slide from 106.3 to 105.9 points now.
5. Belgian NBB Business Climate: Wednesday, 13:00. While coming from a small country, this is usually a good bellwether to the whole euro-zone. Business climate ticked up to -7.3 points in August and is expected to continue edging higher to -7.1 points now. The negative number means worsening economic conditions.
6. M3 Money Supply: Thursday, 8:00. The ECB monitors the amount of money in circulation as another measure of inflation. Growth has accelerated from the lows, and now stands at 1.8% y/y. Another move up to 1.9% is expected now.
7. Private Loans: Thursday, 8:00. While money in circulation is growing, private loans are squeezing, and this weighs on growth. After a slide of 1.6% y/y last month, a small improvement to -1.5% is expected now.
8. German GfK Consumer Climate: Friday, 6:00. This survey of 2000 German consumers disappointed with a drop to 8.6 points in August. Another slide to 8.5 is predicted now.
9. German Import Prices: Friday, 6:00. Prices of imported goods serve as yet another measure of inflation, or lack of. After a bigger than expected slide of 0.4% in July, a more moderate one of 0.2% is expected now.

* All times are GMT

[Samirofi]

EUR/USD Forecast Oct. 6-10

EUR/USD had its moments of recovery, but eventually closed the week at new lows. Is the round number of 1.25 a bottom, or just another stepping stone on the way down? Yet another speech from Draghi as well as some important German data dominates this week’s trading.

1. German Factory Orders: Monday, 6:00. While being a volatile indicator, the level of orders in Europe’s powerhouse is critical to the euro. After a surge of 4.6% in July, a correction with a slide of 2.4% is likely for August.
2. Retail PMI: Monday, 8:10. This indicator for the retail sector surveys purchasing managers’ in the euro-zone’s three largest countries. The index fell deeper into contraction territory last month, to 45.8 points. Another slide cannot be ruled out now.
3. Sentix Investor Confidence: Monday, 8:30. This wide survey of 2800 analysts and investors disappointed with a plunge to negative ground last month: -9.8 points. Pessimism is expected to prevail with another dip to -11.8 points.
4. German Industrial Production: Tuesday, 6:00. Industrial production rose by a strong 1.9% in July, beating estimates and providing hope for a return to growth in Q3. However, expectations for August are lower – a drop of 1.4% is expected.
5. German Trade Balance: Thursday, 6:00. One of the reasons why the euro was bid for such a long time is the fact that inflows come into the zone via Germany’s huge trade surplus that reached an impressive 22.2 billion euros in July. A slide to 18.4 is expected for August, despite the more favorable exchange rate.
6. French Trade Balance: Thursday, 6:45. On the other hand, France suffers fro a chronic trade deficit and this is expected to grow from 5.5 to 5.7 billion. France is in the spotlight of late, mostly due to the recent political crisis.
7. ECB Monthly Bulletin: Thursday, 8:00. One week after the rate decision, the European Central Bank releases the data it used for its decision. The outlook for inflation is the most important part, given the Bank’s mandate.
8. Mario Draghi talks: Thursday, 15:00. The president of the ECB gives a high profile speech in Washington around the IMF meetings. Draghi always has an influence on markets, even when he only reiterates previous statements.
9. French Industrial Production: Friday, 6:45. France saw two consecutive months in a row, but it is now expected to report a slide in production for the month of August: 0.2%.

* All times are GMT

[Samirofi]

EUR/USD Forecast Oct. 13-17

EUR/USD managed to stage a nice recovery but didn’t go too far before losing some of the gains. Has it finally bottomed out? An important German survey and final CPI are accompanied by several speeches from Mario Draghi and other events. Here is an outlook on the highlights of this week


Significant drops in factory orders and industrial output in Germany caused a lot of concern. Also Draghi weighed in, with repeating his commitment to do whatever is necessary to tackle low inflation. The president of the ECB also hinted that rates are not set to move before 2017. On the other side of the pond, the dollar got a significant blow from the FOMC minutes, where the central bank expressed concern about euro-zone growth and also about the strength of the dollar. However, it later recovered, in part thanks to encouraging labor data. What’s next? Let’s start:

1. Mario Draghi speaks: Saturday, 16:00. The president of the ECB will give his final speech in Washington, as the long IMF meetings draw to an end. He already moved the markets from Washington by hinting that a rate hike is not due before 2017. Will he say something to trigger a Sunday gap.
2. Eurogroup and Ecofin meetings: Monday and Tuesday. The finance ministers of the euro zone and later the whole EU will meet on Monday and Tuesday respectively. The growing tension between Germany that wants fiscal discipline and France that defies EU guidelines, is a hot topic. Also the recent ECB measures as well as the exchange rate are certainly topics that we’ll hear about, even if they are not necessarily on the agenda. Comments from various members are set to move markets.
3. French CPI: Tuesday, 6:45. Europe’s second largest economy saw a monthly price rise of 0.4% in August and September’s number is needed for the final CPI for the whole euro-zone.
4. German ZEW Economic Sentiment: Tuesday, 9:00. This early survey of analysts and institutional investors has been declining since the beginning of the year, reaching 6.9 points in September. Another slide is expected now, especially in light of the poor economic data coming out of Germany lately. The all-European figure hit 14.2 points in September and is also expected to slide.
5. Industrial Production: Tuesday, 9:00. Output rose by 1% in July in the euro-zone, but saw a sharp fall in August, if we learn from the data already released by the “locomotive”, Germany. A significant drop could certainly hit the common currency.
6. German Final CPI: Wednesday, 6:00. Germany reported no change in prices in the preliminary release for September. This will likely be confirmed now. Year over year, the figure stands at 0.8%, above the euro-zone level, but very far from the ECB’s target.
7. Mario Draghi talks: Wednesday, 7:00 and 18:00. Back to the ECB HQ in Frankfurt, Draghi is scheduled to make two speeches in two separate events. At this point we will already have the industrial output number for the euro-zone (it was poor for Germany) as well as some news from the meeting of the financial chiefs. Draghi moves the markets even if he doesn’t say anything new.
8. Bundesbank Monthly Report: Wednesday, 10:00. The German central bank is likely to cast a darker picture of the German and euro-zone economies and its forecasts always have an influence. The so called “Buba” has been somewhat marginalized in the recent ECB decisions, that weren’t to its liking.
9. Final CPI: Thursday, 9:00. According to the preliminary release, CPI hit 0.3% y/y and core CPI 0.7% y/y. Both are the lowest levels for both indicators. These numbers are expected to be confirmed, but revisions are not uncommon.
10. Trade Balance: Thursday, 9:00. One of the things that kept the euro bid and battled the bad news was the zone’s wide trade surplus. After a positive figure of 12.2 billion in July, an even wider surplus is expected for August.
11. German WPI: Friday, 6:00. The prices at the wholesale level provide yet another insight to the inflation situation, and some view it as a a forward looking figure. In the past 4 months, the number fell short of expectations, including a drop of 0.2% in prices back in August.

[Samirofi]

EUR/USD Forecast Oct. 27-31

EUR/USD had an interesting week, amid speculation about central bank action on both sides of the Atlantic. A very busy week awaits us: the stress test results, Germany’s IFO survey and the all important inflation figures are set to dominate. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD.



Speculation that the ECB would begin buying corporate bonds hurt the euro and countered a continued USD correction. German PMIs gave a boost to the common currency, but France is not playing along. Worries about growth are certainly present. In the US, data was generally positive, with jobless claims and inflation holding on. Does the price of the pair already reflect the news or are we set for the next leg lower?

1. German Flash CPI: Thursday: states release data during the morning and the all-German number is at 13:00. Prices remained flat in Germany in September, with a very moderate rise of 0.8% y/y. While this is above the euro-area average, it is far from convincing. The preliminary figure for October is expected to be similar.
2. Spanish Flash CPI: Thursday, 8:00. In the zone’s fourth largest economy, there is already outright deflation. A y/y fall of 0.2% was recorded for Spanish CPI. A smaller drop is expected now: 0.1%.
3. Spanish Flash GDP: Thursday, 8:00. Contrary to most of the euro-zone, Spain is enjoying some growth. The quarterly growth rate stood on 0.6% in Q2 2014. We already got hints from the Luis de Guindos that growth is expected to remain solid. A somewhat lower quarterly growth rate is expected for Q3, but y/y, an above average growth rate of 1.6% is expected by the Bank of Spain and the official result will likely be very similar.
4. German Unemployment Change: Thursday, 8:55. The number of unemployed in Germany rose by 12K in August, and added to the gloomy picture for the zone’s largest economy. A smaller growth in unemployed is expected now: 4K.
5. French Consumer Spending: Friday, 7:45. The euro-zone’s second largest economy enjoyed a 0.7% rise in consumer spending in August, erasing the previous month’s fall of the same scale. A small decline is likely now.
6. Italian Monthly Unemployment Rate: Friday, 9:00. The EZ’s third largest economy suffers from the worse than average unemployment: 12.3% in comparison with the 11.5% average for the euro-zone. It is far lower than Spain’s number, at 23.7%, but this isn’t encouraging.
7. CPI Flash Estimate: Friday, 10:00. Euro-zone inflation is very low and already triggered a wide array of measures from the ECB. Headline CPI stands at 0.4% in the final read for September, and could slide lower together with the falling oil prices. Core inflation stands at 0.7% and could remain unchanged now. This preliminary data for October is critical for Draghi’s sentiment on November 6th.
8. Italian CPI: Friday, 10:00. Italy has a significant contribution to euro-zone inflation and while overshadowed by the simultaneous release of the euro-zone CPI, this will also be watched. After a fall of 0.3% in September, another slide is expected due to oil prices.
9. Unemployment Rate: Friday, 10:00. The unemployment rate in the euro-zone stands on 11.5%. While currently not high on the ECB’s agenda, this number is a reminder of why inflation is so low: not enough people are working, making money and consuming.

* All times are GMT

[Samirofi]

EUR/USD Forecast Dec. 15-19

EUR/USD experienced new lows but made a big comeback, riding on USD weakness . In the last full week of the year, we have a busy schedule with PMIs, important German surveys and final inflation data among other events. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.


The second tender of the ECB’s TLTRO fell short of expectations, at just under €130 billion. Together with unimpressive other measures, it seems that QE in the euro-zone is imminent, perhaps already in January. Industrial output and some second tier inflation figures also came short of expectations. However, EUR/USD was saved by the weakness in the US dollar, that retraced the post-NFP gains despite some positive data such as the upbeat retail sales number. What’s next for the pair? Let’s start:

1. Bundesbank monthly report: Monday, 11:00. Germany’s central bank provides a monthly report with an assessment of current conditions and future projections for the zone’s No. 1 economy. It will be interesting to see if the gloom appears also here. The German government cut future forecasts not so long ago, and so did the ECB and the EU Commission.
2. Flash PMIs: Tuesday: France at 8:00, Germany at 8:30 and the euro-zone at 9:00. The purchasing managers’ indices for November were not too good. The numbers have a strong impact as they are considered forward looking indicators. French manufacturing PMI stood on 48.4 points and services at 48.8. Both figures are below 50 points separating growth and contraction. Both figures are expected to tick up to 48.7 and 48.6 respectively. In Germany, manufacturing slipped to 49.5 points, but services remained in growth territory at 52.1 points. Manufacturing is predicted to return to positive ground with 50.4 and services to advance to 52.6 points. For the whole euro-zone, we had a balanced 50.1 in manufacturing and 51.3 points for services. Also here, improvements to 50.5 and 51.6 points are predicted.
3. German ZEW Economic Sentiment: Tuesday, 10:00. After an ongoing deterioration throughout most of the year, this important survey of around 275 analysts and institutional investors emerged from negative ground and returned to optimism with 11.5 points. Is more serious growth on the way? Sentiment is predicted to rise to 19.8 points. The all-European figure carries expectations to jump from 11 to 20.1 points.
4. Trade Balance: Tuesday, 10:00. The euro-zone enjoys a surplus in its trade numbers, and this certainly keeps the euro bid. The area enjoyed a positive figure of 17.7 billion in September and is likely to enjoy a similar number for October: 18.2 billion.
5. Final CPI: Wednesday, 10:00. The initial numbers for November showed the the rock bottom levels of 0.3% y/y CPI and 0.7% Core CPI. Did they already reflect the sharp drop in oil prices seen in late November? We could see a downgrade in the final figures even if official expectations stand on a confirmation of current numbers. Headline inflation is the “single needle” in the ECB’s compass.
6. EU Economic Summit: Thursday and Friday. The leaders of the full European Union (28 countries) meet to discuss current affairs just before the year ends. Youth unemployment is one of the problematic issues, as well as government deficits. Tensions between Germany that drives for austerity and other countries is likely to be seen. An optimistic message about a serious growth could boost the single currency, but this isn’t likely.
7. German Ifo Business Climate: Thursday, 9:00. Germany’s No. 1 Think Tank joined ZEW last month with a rise in confidence after long months of declines. The wide survey of 7000 businesses is set to advance from November’s 104.7 points all the way to 105.6. If both IFO and ZEW go in the same direction, it would have a positive impact on the euro.
8. German GfK Consumer Climate: Friday, 7:00. Contrary to the previous surveys, this one related to consumers. Here, we also had advances in recent months, and the indicator reached 8.7 points in November. Optimism prevails here as well with a climb to 8.9 points.
9. German PPI: Friday, 7:00. Producer prices in Germany have been sliding or stagnating in recent months, even falling behind consumer prices. This secondary measure of inflation dropped by 02% in October, below forecasts, and is expected to slide also now for November by the same scale.
10. Current Account: Friday, 9:00. Going hand in hand with the trade balance report, the wider current account figure is also positive. The euro-zone’s surplus, driven by German exports, reached no less than 30 billion euros in September. While this is a late figure, another expansion could still positively impact the euro.

* All times are GMT

[Samirofi]

EUR/USD Forecast Dec. 22-26

EUR/USD dropped to lower levels in the last full week of the year as the monetary policy divergence was seen once again. Can it break to lower ground during this week of light Christmas trading? Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.


While Germany saw better manufacturing PMI and business confidence, it is becoming clear that January will see the introduction of outright QE, as another comment pointed to that direction. This weighed on the euro. In the US, a relatively balanced FOMC statement was followed by a hawkish Yellen, which sees rate hikes in 2015 and the impact of oil prices as transitory and positive.

1. Consumer Confidence: Monday, 15:00. This official figure by Eurostat disappointed in October with a fall to -12 points, reflecting deeper pessimism among the 2300 consumers surveyed in the euro-zone. A small tick up to -11 is expected now.
2. French Consumer Spending: Tuesday, 7:45. The zone’s second largest economy experienced two consecutive months of declines in consumption, with a drop of -0.9% in October, worse than a rise expected. The economy is not doing well, to say the least. A small bounce up of 0.2% is likely for November.
3. Italian CPI: Tuesday, 10:00. The euro area’s third largest country gets special attention this month because it is the first to release inflation numbers for the month of December. We can see how the plunge in oil prices had an impact on Italian consumers. In November, prices dropped by 0.2%, better than expected, if this can be seen as a positive surprise. A rise of 0.2% is expected now.
4. Belgian NBB Business Climate: Tuesday, 14:00. While coming from a small country, the business indicator from Belgium is a good measure of activity. The figure advanced to -6.1 points in November, but this still reflects pessimism. A tick up to -5.8 is likely now among the ~6000 businesses surveyed here.

Markets are set to grind to a halt on December 24th, Christmas Eve, remain completely closed on Christmas, the 25th and hardly see any activity on the 26th (Boxing Day)

[Samirofi]

EUR/USD Forecast Jan. 5-9 2015

EUR/USD took a deep dive in the week that put us into 2015. The pair is trading at the lowest levels since 2010. Are further falls awaiting us or is a big correction awaiting? Markets are returning to strong form in the first full week of 2015. CPI is the big release in a busy week. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.


In the last week of 2014, news broke that Greece is headed to general elections. While this was expected by markets, it could certainly continue weighing on the euro during January. We also heard some German opposition to QE, but given the early signs of December’s deflation coming from Spain, can they really stop it? Probably not, if we listen to Draghi. Also the change in flows is a euro negative. Looking to the US, we had some mediocre numbers, but the general picture is still of solid growth.

1. German CPI: Monday, states release data during the European morning, all-German release at 13:00. German consumer prices remained flat in November m/m amid sliding oil prices and a struggling economy. With the fall in oil prices being fulling felt in December, a significant drop in prices is expected. This is a key input for the all-European figure later on. A m/m rise of 0.2% is expected, while year over year, a very weak rise of 0.3% is on the cards.
2. Spanish Unemployment Change: Monday, 8:00 (postponed from the previous week). While unemployment is very seasonal in Spain, this monthly gauge provides a picture of a country which has a huge unemployment rate, but seems to move in the right direction. After a drop of 14.7K in November, a bigger drop of 72K is expected in the number of the jobless.
3. Sentix Investor Confidence: Monday, 9:30. This wide survey of investors has improved to -2.5 points in December. While the number was negative, reflecting pessimism, it was the best since August when it was positive. A move to -0.9 points is expected now.
4. Services PMIs: Tuesday: Spain at 8:15, Italy at 8:45 and final euro-zone data at 9:00. The services sector is doing better than manufacturing in most countries. Spain had a figure of 52.7 in November, above the 50 point mark separating growth from contraction and 52.9 is expected now. Italy had 51.8 and a slide to 51.4 is predicted now. The euro-zone 51.9 points in the preliminary number for December, which is expected to be confirmed now.
5. German Unemployment Change: Wednesday, 8:55. Europe’s largest economy enjoyed two consecutive months of drops in unemployment, beating expectations. After the fall of 14K in October, a smaller drop is on the cards for December: 6K jobless.
6. Retail PMI: Wednesday, 9:10. This PMI by Markit measures the retail sector, which is not too optimistic. A score of 48.9 was seen in November, above previous months but still in contraction territory. Can the drop in oil prices push purchasing managers in this sector to growth ground?
7. German Retail Sales: Thursday, 7:00. The volume of sales is quite volatile in Germany: a rise of 1.9% in October followed a drop of 2.8% in September. A small rise is likely now: +0.2%.
8. Inflation data: Wednesday, 10:00. This is critical input for the ECB meeting on January 22nd. Inflation has reached rock bottom levels in November: 0.3% in headline CPI, which is the ECB’s mandate, and 0.7% in core prices. These numbers were already seen in this cycle but they are the lowest. With the fall in oil prices seen mostly in December, there is no doubt that we will see a lower headline number now. Expectations stand at 0% y/y. The big question is: will we see a an annual drop in prices? Also the core number is important: if prices excluding oil and other volatile components remain stable, it could give the central bank something to cling to. However, a downgrade is expected here as well, to 0.6%.
9. Unemployment Rate: Wednesday, 10:00. One of the reasons for low inflation is the lack of demand, and this has a lot to do with high unemployment: 11.5% is the level seen in the euro-zone for the past 5 months. The same level is predicted for November.
10. German Factory Orders: Thursday, 7:00. The German locomotive saw two straight months of rises in orders at the factory level, following a big drop beforehand. After the rise of 2.5% in October, a small drop is likely for November: -0.6%.
11. Retail Sales: Thursday, 10:00. While the euro-zone number is released after the German publication, it is still meaningful and moves markets.A poor growth rate of 0.4% was seen in October, following a drop of 1.2% in September. Another small growth figure is likely now: +0.3%.
12. PPI: Thursday, 10:00. Producer prices are pressured to the downside, and October’s number was especially weak with a drop of 0.4% m/m. Another drop is on the cards now: -0.2%.
13. German Industrial Production: Friday, 7:00. Following the factory orders release, Germany releases industrial output. After a rise of 0.2% in October, a similar print is likely now: a gain of 0.4%.
14. German Trade Balance: Friday, 7:00. One of the things that kept the euro bid for a long time is the positive trade balance, driven in most by Germany. The trade surplus of this country crossed the 20 billion dollar mark and hit 20.6 billion in October. A slightly narrower surplus is estimated now: 19.4 billion.
15. French Industrial Production: Friday, 7:45. The zone’s second largest economy saw output from its industry fall by 0.8% in October, worse than expected. A bounce is expected now with +0.4%.
16. French Trade Balance: Friday, 7:45. Contrary to Germany, France suffers from a trade deficit which stood on 4.6 billion in October. A marginally narrower deficit is on the cards now: 4.5 billion.

* All times are GMT