This page has been archived and commenting is disabled.
The Week Ahead for the EUR: Sept 13-17
The bears were certainly back in town for the Euro, news
out of Europe has been mixed. German macro
data has been disappointing, showing that the overall euro area is entering a
period of weaker growth. Also this past week, some European peripheral
countries, and especially Portugal,
Ireland, Spain and Greece, saw a rise to record levels
in their 10-year bond and CDS spreads. According to a WSJ report, the European
stress tests results released by the CEBS in July may have understated some
holdings of sovereign debt. Confirming this fact is the announcement given by
the German banking association that Germany's 10 biggest banks may need
EUR105bn of additional capital under Basel III rules. Moreover, the Government
in Ireland
decided to split Anglo Irish Bank into a “good” and a “bad” bank, as the
recently nationalized bank asked taxpayers for an additional capital
requirements of €25bn early in the week. All these facts didn’t help the Euro
and highlighted how the structural vulnerabilities of the European peripheral
countries remain present.
Overall consensus: Slightly bearish as renewed debt crisis fears reappeared in the
market. In addition, the Basel
meeting of this weekend could pose a risk to the euro as tighter capital
requirements are likely to be set in the new Basel III framework.
Here’s an outlook for the major events that await the
Euro this week and an updated technical analysis for EUR/DOL. In the euro area
it will be a quiet week in terms of data, with the most interesting release
being the German ZEW.
Monday, September 13
Non major market moving events for the Euro.
Tuesday, September 14
The Eurozone starts the action off at 05:00 EST when the
Center for European Economic Research will publish the German ZEW Economic
Sentiment for September. This leading indicator of German economic health
dropped sharply in recent months. 350 German institutional investors and
analysts sent the indicator down from 21.2. to 14 in August. The score is
expected to slide down to 11.3 now. As Germany tends to lead the Eurozone
economy, the German ZEW score has a stronger impact, and will rock the Euro.
Despite the overall negative consensus, analysts in the market flag that there
is a pretty good chance that we get a positive surprise since sentiment seems
to have has improved notably due to US data getting better. Likewise, the
all-European figure is expected to fall from 15.8 to 14.9.
Later in the day, we get the first look at Q3 output
data when July Industrial Production (IP) for the Euro-zone will become
available. Despite the sovereign debt
situation in some European countries, the economic data out of the Eurozone are
consistent with the overall outlook for slow recovery to continue. Industrial
production data were stronger in the second quarter, though output slipped at
-0.1% in June. A modest rise of 0.2% is expected this time. The figure tends to
have a relatively mild impact because Germany
and France
released earlier their production data. However, the EU Industrial Production
release still surprise and move the Euro.
Wednesday, September 15
Also in the Eurozone are final inflation data for
August. Prices were flat in June and July, while are expected to have slipped a
bit in August, though inflation remain on the rise on a year-over-year basis. This
figure is considered the Eurozone's most important inflation data because it is
used as the central bank's inflation target. However, it tends to have a
relatively mild impact as the CPI Flash Estimate and German Prelim CPI are
released about 15 days earlier. The annually adjusted rise of 1.6% for the
overall CPI is expected to be confirmed, whereas the Core CPI is expected to be
revised from 1.0% to 0.9%, with the energy contribution to go slightly down and
food price inflation to move up.
Thursday, September 16
Non major market moving events
for the Euro.
Friday, September 17
Friday finishes the week with German producer prices
for August as well as EMU current account for July.
Published at 02:00 EST, the
German Producer Prices Index has a forecasted value of only 0.3%. This is a
modest weakening from the 0.5% of July, and it will pare back the rise seen in
the previous two months. This is a good news for price stability.
Following the trade balance
released on Thursday, the European Central Bank will publish the value of
current account. This figure is going to be disappointed also this time. Its
expected negative figure indicates that more goods and services, income fows,
and unilateral transfers were exported than imported during July. However, the
drop will be milder than the fall of the previous two months as the deficit is
expected to squeeze from 4.6B to -3.7B this time.
The Technical View
This week the EURUSD made an
effort to 1.2921-1.2931 Resistance area, this area has proven to be a very
strong resistance area in recent weeks and this strength remains. The failure
of the bulls at this resistance sets up a bearish continuation if the bears can
take us below 1.2587 with strength. This area is also the 50% retrace from the
June lows. This view will further compounded if the 1.2460-1.2480 support level
is broken.
The Euro is at a key juncture
technically in the long term and overall down trend remains intact, bullish
strength in this area especially through the 1.2921-1.2931 area will help break
the bearish technical structure. However we feel that the bearish structure has
the highest probability of confirmation in the medium term.
What’s Important?
The German ZEW figures will be
the key news event of the week, 1.2921-1.2931 the key resistance and 1.2587
important support area. The bearish technical structure remains intact.
Key Words for the Week
German ZEW, 1.2921-1.2931
Resistance, 1.2587 Support
Pivotfarm – The Home of Support and Resistance Trading
»
- advertisements -
the euro has been quite a popular scam and so doomed from the start when the jig is up.
http://covert2.wordpress.com
Did anybody notice this one last friday?
A overall -7% drop on the average regional banks just after 12'o clock. What can cause something big like that?
http://www.google.com/finance?catid=us-56630876
"Thursday, September 16
Non major market moving events for the Euro." -PivotFarm
Nothing except the Philly Fed to be released at 1000 ET. The truth is that this reading will either reinforce the German ZEW or contradict it. Simple.
If the two figures come in as opposites, expect the Euro to react against all the majors in the opposite direction on the Philly Fed release as it did on the ZEW release.
If the two figures correspond to the upside, the Euro could be in for a massive melt-up and vice versa. I am putting my money on Long EUR/x, especially the JPY.
Thanks for the guidelines for Euro-watching. The fat lady has not yet sung.
There is a lot of call buying in the 45 calls in the vix on friday while the daily price closed at 21.99. Maybe that sound we hear is the fat lady clearing her throat.