Analysis and Recommendations:

The EUR/USD bounced up and down on good economic news on both sides of the Atlantic. With positive news from Germany, where the RWI economic institute raised it projection for growth, coupled with a strong bond auction of EFSF paper. The euro opened the day at 1.3224 and moved to a high of 1.3285 but settled in at a drop to 1.3191 after the housing report in the US although it was below forecast, it had a positive lining. I continue to see the euro trading under the 1.32 level between the 1.30- 1.32 range falling to the bottom of this range by month's end.

While the reduction in financial stress in Europe is a welcome development, more needs to be done to fully resolve the crisis, says top U.S. central banker Ben Bernanke. Treasury chief Tim Geithner's also to deliver congressional testimony. The testimony gave an extra push to the USD. Both men had positive attitudes which translate into strength for the USD and the US economy on the whole.

The position of the United States has generally been that Europe needs to really step up and do a lot more, Bernanke said. He and Treasury Secretary Timothy Geithner testified before the House Oversight and Government Reform Committee.

European leaders must strengthen the banking system, build a stronger financial backstop to guard against contagion in sovereign-debt markets, and critically take steps to increase growth and competitiveness and reduce external imbalances in the region's troubled countries, Bernanke said.

Europe's financial and economic situation remains difficult, and it is critical that European leaders follow through on their policy commitments to ensure a lasting stabilization, Bernanke said.

The European Financial Stability Facility got some EUR12.5 billion demand for its EUR4 billion new five-year bond, one of the banks managing the deal said Wednesday.

This contrasts with November last year, when the euro zone's temporary bailout fund attracted just enough demand for a EUR3 billion 10-year bond, as investors remained wary over the lack of clarity about the fund's functions and future actions. While demand from euro-zone banks for the European Central Bank's seven-day dollar liquidity offer fell Wednesday, a likely sign that dollar funding on the interbank market is becoming more available to euro-zone banks.

In Germany, the RWI economic institute raised its forecast for the country's 2012 economic growth Wednesday, but warned that risks to the outlook remain significant. Germany's economy is likely to grow 1.0% in 2012, up from a December forecast of 0.6%

Germany's government will probably need to increase its guarantees to the euro-zone's firewall to about EUR280 billion, much more than the EUR211 billion previously planned, German newspaper Sueddeutsche Zeitung reports Wednesday.

Across the Atlantic, the sales of existing homes fell 0.9% in February after an upward revision to the prior month, as improving job prospects, cheaper homes and warm weather led to the best start to the year since the bursting of the housing bubble. The housing market is ripe for a rebirth, now that the jobs market seems to be doing better.

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Economic Data March 21, 2012 actual v. forecast

Mar. 21

00:30

 

AUD

 
 
 

MI Leading Index (MoM) 

0.6%

 
 
 

0.7% 

 
 

 

03:00

 

NZD

 
 
 

Credit Card Spending (YoY) 

4.0%

 
 
 

3.1% 

 
 

 

05:30

 

JPY

 
 
 

All Industries Activity Index (MoM) 

-1.0%

 

-0.5% 

 

1.6% 

 
 

 

08:30

 

THB

 
 
 

Thai Trade Balance 

0.52B

 

-0.10B 

 

-0.20B 

 
 

 

08:30

 

THB

 
 
 

Thai Interest Rate Decision 

3.00%

 

3.00% 

 

3.00% 

 
 

 

10:30

 

GBP

 
 
 

MPC Meeting Minutes 

 

 
 
 
 
 
 

 

10:30

 

GBP

 
 
 

Public Sector Net Borrowing 

12.9B

 

5.2B 

 

-10.2B 

 
 

 

11:30

 

EUR

 
 
 

German 2-Year Schatz Auction 

0.310%

 
 
 

0.250% 

 
 

 

12:00

 

USD

 
 
 

MBA Mortgage Applications  

-7.4%

 
 
 

-2.4% 

 
 

 

13:30

 

CAD

 
 
 

Leading Indicators (MoM) 

0.6%

 

0.6% 

 

0.4% 

 
 

 

14:30

 

USD

 
 
 

Fed Chairman Bernanke Testifies 

 

 
 
 
 
 
 

 

15:00

 

USD

 
 
 

Existing Home Sales 

4.59M

 

4.61M 

 

4.63M 

 
 

 

15:00

 

MXN

 
 
 

Mexican Retail Sales (YoY) 

4.4%

 

4.0% 

 

3.5% 

 
 

 

.

09:00     EUR       French Manufacturing PMI                       

09:30     EUR       German Manufacturing PMI

10:00     EUR       Manufacturing PMI                      

The European, French, and German Manufacturing Purchasing Managers' Index (PMI) measure the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; below indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company's performance, which can be a leading indicator of overall economic performance.

10:30     GBP      Retail Sales (MoM)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

11:00     EUR       Industrial New Orders (MoM)

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production.                                                               

13:30     USD      Initial Jobless Claims                     

13:30     USD      Continuing Jobless Claims

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week. Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.       

17:00     EUR       ECB President Draghi Speaks

Mario Draghi (born 3 September1947) is an Italian banker and economist who has been governor of the Bank of Italy and succeeded Jean Claude Trichet as President of the European Central Bank starting November 2011. As head of the ECB, which controls short term interest rates, he has more influence over the EUR value than any other person. His comments may determine a short-term positive or negative trend.

Government Bond Auctions (this week)

Mar 22  10:10  Sweden  I/L bond auction

Mar 22  10.30  UK  Auctions 0.625% 2042 I/L Gilt

Mar 22  15:00  US

Announces auctions of 2Y Notes on Mar 27, 5Y Notes on Mar

28 & 7Y Notes on Mar 29

EUR/USD Pivot Points (Time Frame: 1 Day)

 

Name S3 S2 S1 Pivot R1 R2 R3

Classic
1.3075
1.3127
1.3181
1.3233
1.3287
1.3339
1.3393

Fibonacci
1.3127
1.3167
1.3193
1.3233
1.3273
1.3299
1.3339

Camarilla
1.3206
1.3216
1.3225
1.3233
1.3245
1.3254
1.3264

Woodie's
-
1.3128
1.3182
1.3234
1.3288
1.3339
-

DeMark's
-
-
1.3260
1.3219
1.3154
-
-