Sunday, September 15, 2013

EUR/USD Forecast (September 16-20)

EUR/USD recovered and rose in range after two weeks of drops, riding on the dollar’s weakness. German ZEW Economic Sentiment, trade balance and inflation data are the highlights of this week. Confidence is on the rise in the Eurozone with Sentix index soaring to plus 6.5 in August from minus 4.9 in July indicating pessimism is entrenched in the euro-area. However despite this positive reading, industrial production data came out worse than expected, declining 1.5% in August. German elections are getting closer. In the US, data was generally weaker than predicted, but this will not necessarily stop the taper train.

1.Italian Trade Balance: Monday, 8:00. Italy’s foreign trade surplus shrank in June from May, reaching €3.62 billion but was stronger than the same month last year. The Italian economy depends on external demand to return to growth and the recent improvement in the Euro-area brings positive growth to Italy’s exports. The purchasing managers’ index for manufacturing jumped to a more than two-year high of 50.4 in July, signaling expansion in the third quarter. Surplus is expected to grow to €4.13 billion.

2.Eurozone Inflation data: Monday, 9:00. Euro Area inflation remained unchanged in July at 1.6%. in line with the ECB’s latest announcement and market forecast. However, the monthly reading recorded a drop of 0.5% from a prior of 0.1%. Meanwhile, core CPI, which excludes volatile items like food, energy, alcohol and tobacco, declined to 1.1% from 1.2% in the previous month. ECB President Mario Draghi confirmed that underlying price pressures are expected to remain “subdued “over the medium term. The ECB reduced its inflation forecast for 2013 and 2014 to 1.5% from 1.6% and 1.7% respectively. CPI is expected to gain 1.3%, while core CPI is projected to climb 1.1%. 

3.Eurozone Current Account: Tuesday, 8:00. The eurozone’s current account surplus declined to 16.9 billion euros ($22.6 billion) in June from 19.5 billion euros in May, This important indicator is closely monitored showing the ability of a country or area to pay its debts in the world. It is crucial for the long-term confidence of investors and trading partners. The eurozone’s current account surplus is expected to reach 18.3 billion euros.

4.German ZEW Economic Sentiment: Tuesday, 9:00. The ZEW economic think tank’s survey of economic sentiment advanced to 42.0 from 36.3 in July, reaching its highest level since March, beating forecast of a 40.3 reading. The recent strong data such as the big gain in industry output in June indicate a real improvement after a long, dry spell. Greece met its fiscal targets in the first seven months while Spain and Italy’s 10-year debt risk premiums have hit their lowest in two years indicating the Eurozone is emerging from recession. A further improvement to 45.3 is expected now.

5.ZEW Economic Sentiment: Tuesday, 9:00. The euro area ZEW economic sentiment survey for the euro zone, edged up significantly to 44 points in July from June’s 32.8, beating analysts’ expectations for a reading of 37.4 points. Industrial production improved supporting signs of recovery in the Eurozone bloc. Inflation also increased on annual bases. ZEW economic sentiment survey for the euro zone is expected to climb to 47.2.

6.German Buba Monthly Report: Thursday, 10:00. German economic growth rebounded in the second quarter, contrary to thee stagnation in the first quarter. Economic activity increased significantly indicating the German economy has returned to its normal growth rate. German economic growth is expected to “normalize and stabilize” in the remainder of the year.

7.Consumer Confidence: Friday, 14:00. Consumer morale in the euro zone improved to -15.6 in August, beating market consensus of -17 and climbing to its highest level in two years. This rise offers further backing to the Euro-area’s long awaited recovery. has started to recover. Improved consumer confidence followed encouraging data on business activity in the euro zone in August, which picked up faster than expected, raising expectations that the third quarter will show further improvement. A stronger reading of -14 is expected this time.

*All times are GMT

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