Economic Events: (GMT)
Please review the individual daily forecast for explanations and expected results
Jan. 30 13:30 USD Core PCE Price Index (MoM)
Tent EUR German CPI (MoM)
13:30 USD Personal Spending (MoM)
Jan. 31 07:45 EUR French Consumer Spending (MoM)
08:55 EUR German Unemployment Rate
08:55 EUR German Unemployment Change
10:00 EUR Unemployment Rate
13:30 USD Employment Cost Index (QoQ)
14:45 USD Chicago PMI
15:00 USD CB Consumer Confidence
Feb. 01 08:30 CHF SVME PMI
09:00 EUR Manufacturing PMI
09:30 GBP Manufacturing PMI
10:00 EUR CPI (YoY)
13:15 USD ADP Nonfarm Employment Change
15:00 USD ISM Manufacturing Index
Feb. 02 13:30 USD Nonfarm Productivity (QoQ)
13:30 USD Initial Jobless Claims
13:30 USD Unit Labor Costs (QoQ)
13:30 USD Continuing Jobless Claims
Feb. 03 09:30 GBP Services PMI
10:00 EUR Retail Sales (MoM)
13:30 USD Average Hourly Earnings (MoM)
13:30 USD Nonfarm Payrolls
13:30 USD Unemployment Rate
13:30 USD Private Nonfarm Payrolls
15:00 USD ISM Non-Manufacturing Index
EUR/USD Weekly Fundamental Analysis Jan. 30- Feb. 3, 2012, Forecast
Highest: 1.5091 USD on 03 Dec 2009.
Average: 1.3709 USD over this period.
Lowest: 1.19 USD on 07 Jun 2010.
Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.
The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.
Trading comprises of careful market studying, strategizing, planning and executing the plan in a timely manner. This is entirely different to scalping which is resorted to by many a trader on a regular basis. These traders are often clueless as to the market situation and just use this as a type of defense mechanism to compensate for the general lack of information and knowledge. The EUR/USD is a currency pair that certainly offers a lot of currencies trading opportunities if handled correctly.
Average broker spread: 2-3 pips Daily range average: 90-100 pips Best time to trade: Euro Session (0700 GMT - 1700 GMT) some factors affecting the EUR/USD rate:
- The interest rate differential between the European Bank(ECB) and the Federal Reserve(FED)
- Dollar strength drives EUR/USD lower
- FED intervention to weaken the dollar the sends EUR/USD higher
Trading the EUR/USD
Trading Experience: New and Advanced currency traders Trading Style: Day trading and Swing trading
1) Applying Technical Analysis and/or Analyzing Fundamental News from the Euro and US zone to make EUR/USD trading decisions. Breaking strong psychological levels (1.3000, 1.2000,..) and/or surprising economic news releases can make the EUR/USD move a lot in one direction without much retracements.
2) Since the EUR/USD pair tends to be negatively correlated to the USD/CHF, it is always a good idea to compare both EUR/USD and USD/CHF charts in order to predict future moves, if USD/CHF breaks above an important resistance level and EUR/USD didn't break support level yet, the EUR/USD is very likely to break below support level.
Analysis and Recommendation:
The EUR/USD soared midweek and continued to maintain strength against the USD on weak economic reports and the Federal Reserve Statements on interest. The euro ended the week trading at 1.3220 +0.0111 (+0.85%)
Around the world this week:
Italian and Spanish bond yields continue lower, 10 yr in Italy below 6%, Spain's below 5%
German IFO business confidence rises to 8 month high German consumer confidence at best since April
Euro zone manufacturing and services composite index unexpectedly moves back above 50, led by Germany
US Durable Goods orders in Dec surprise to upside but how much was pulled forward from 2012 due to 12/31 expiration of full depreciation expensing?
Jan US confidence rises to best since Feb '11
Richmond and KC manufacturing survey's both rise
Bank of Thailand cuts rates, Reserve Bank of India cuts reserve requirements
Greek Creditors announce agreement, deal to be finalized beginning of the week
Portuguese yields spike, 5 yr CDS up 150 bps on week to new high and CDS insurance skyrockets
Spanish unemployment for Q4 rises to 22.9%
Italian consumer confidence holds at lowest since at least '96 when survey began
Q4 US GDP rises 2.8%, a touch below expectations but nominal GDP gains just 3.2%, the weakest since Q3 '09. If deflator was in line with expectations, Real GDP would have been up just 1.3%. Real final sales up just .8% vs. 3.2% in Q3
Initial Jobless Claims normalize at 377k after holiday distorted 356k last week
Inflation expectations within UoM rise to 3.3%, the most since Sept and remains above the 20 yr avg of 3.0%. Expectations also rise to multi month highs in TIPS market
New Home Sales remain weak, prices fall 12.8% y/o/y
FOMC stretches out zero rates until late 2014, US$ resumes downward trend against everything. Fed destroying the price mechanism as if interest rates are artificially priced, what are assets really worth? If we don't know what assets are really worth, how can capital be efficiently allocated?
Japan's economy would have boomed over the past 10 yrs.
Fitch rating service downgrades, Belgium, Cyprus, Italy, Slovenia and Spain
This has been a busy week, for both the Euro and the USD, compounded by the World Economic Forum in Davos, giving a global platform for many government and business leaders to speak their minds.
As Greece seems to be resolved, Portugal will come to the forefront without giving the markets a minute to breath. Will we see a domino effect or not, can the EU and IMF raise enough money to ringfence these countries.
The euro should remain positive in the beginning of the week as the markets celebrate a settlement, although it has already been factored into the markets, just knowing that it has been put to bed will be a good thing. The euro should hold its own this week but not increase against the USD.
Upcoming Sovereign Bond Sales Dates
Jan 30 10:10 Italy BTP/CCTeu auction
Jan 30 10:10 Norway Nok 4.0bn 5.0% May 2015 bond
Jan 30 11:00 Belgium OLO Auction
Jan 30 12:00 Norway Details bond auction on Feb 06
Jan 31 10:30 Belgium Auctions 3 & 6M T-bills
Jan 31 15:30 UK Details gilt auction on Feb 07
Feb 01 10:10 Sweden Auctions T-bills
Feb 01 10:30 Germany Eur 5.0bn 2.0% Jan 2022 Bund
Feb 01 10:30 Portugal Eur 0.75-1.0bn 3M T-bill
Feb 01 10.30 UK Auctions 5.0% 2025 conventional Gilt
Feb 01 15:30 Sweden Details nominal bond auction on Feb 08
Feb 01 16:00 US
Announces details of 3Y Notes on Feb 07, 10Y Notes on Feb
08 & 30Y Bonds on Feb 09
Feb 02 09:50 France OAT Auction
Feb 02 10.30 UK Auctions 0.125% 2029 I/L Gil
EUR/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3