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The Week Ahead for the EUR: Sept 27th-Oct 1st
In the Eurozone,
sovereign debt issues resurfaced with concerns about Irish and Portuguese debt.
The weaker-than-expected Irish GDP data heightened fears that bank
restructuring added further crippling weight to the government’s debt. Irish
real GDP is currently 13% less than it was at its peak in the fourth quarter of
2007. Yields on Irish and Portuguese government debt climbed higher this week,
while yields on Greek government debt remained elevated. Moreover, recent data
from the euro area is consistent with a slow, albeit positive, GDP growth in
the third quarter. Further evidence of slowing in the Eurozone is the decline
in the manufacturing and service PMI and
mixed recent data from Germany.
Overall
consensus: Bullish. Despite mediocre
economic indicators in the Euroland, the situation is better than in the U.S.
The upcoming week has many
employment and inflation figures, as well as speeches from Trichet. Here’s an
outlook for this week’s events, and an updated technical analysis for EUR/USD.
Monday, September 27
At 03:00 EST the ECB President Trichet will hold opening
remarks at the 13th Conference of the ECB-CFS Research Network on
“Macro Prudential Regulation as an Approach to Contain Systemic Risk” in
cooperation with the Center of Economic Policy and Research in Frankfurt.
Volatility is often experienced during his speeches as traders attempt to
decipher interest rate clues.
Meanwhile, the ECB will publish its monthly report on
M3 growth for August. The amount of money in circulation dropped in recent
months, signaling deflationary pressure. The year-over-year value was stable at
0.2% last month. The forecast is for a jump to 0.4% rise this time. It will be
interesting to see what effect the euro debt crisis has had on the latest
monetary developments.
Later on the day, the ECB President Trichet will hold
another speech. This time he will be In Brussels to testify before the
Committee on Economic and Monetary Affairs of the European Parliament. The head
of the ECB will have a chance to lay out his prospects for the Euro-zone,
discussing a possibility of recovery and maybe future moves on the rates.
Tuesday, September 28
Early on Tuesday, a measure of the German Consumer
Climate for September will be published by the Gfk group. For this important
indicator of financial confidence since more than 2,000 German consumers are
surveyed. After the expected rise in August of 10 basis points, another
increase is likely to follow turning the figure from 4.1 to 4.3 points.
The different German states
will release their consumer price indices during the day, building up the
initial release of German CPI. After an unexpected 0% last month, prices are
predicted to decrease by 0.2% this time.
Generally speaking, consumer price gains are expected to remain subdued in 2010
due to the weak growth prospects and, in particular, dull household spending. Germany precedes
the all-European figure, making this figure important.
Wednesday, September 29
No major market moving events for the Euro.
Thursday, September 30
Germany will publish its unemployment
rate and a report on the change of its unemployment figures for August. The European’s largest economy has showed a
positive decrease in the number of unemployed people –17,000 last month and
21,000 in the previous month. The figure is expected to continue its down trend,
but a small increase is predicted this time, 20,000, putting other weight on
the euro.
Following the German Preliminary CPI of last week, at
9:00 GMT the European CPI Flash estimate will be released by EuroStat. The
Euro-zone’s annual rise in prices drop to 1.6% in August, but is expected to
climb to 1.8% in September. Note that this is the initial release, the highest
reading since the beginning of the financial crisis.
Friday, October 1
German Retail Sales will be published at 02:00 EST.
After a superb rise of 3% in June, this consumer figure has been
decreasing for the last three month. This time an additional negative
correction with a 0.1% drop is expected.
At the end of the upcoming week, the EU unemployment
rate will be published, which stands around 10% in the past 6 months causing
worries. The rate varies between Germany
and France which have
stronger economies, and countries like Spain, that has an unemployment
rate of nearly 20%. The average 10% is expected to remain stable, which should
be consistent with the PMIs released last week. A drop under this double digit figure will be
a great relief.
The Technical
View
The Euro powered through the 1.3330-1.3340 Resistance,
above this area the 1.3685-1.3695 area will provide an initial barrier followed
by 1.3810-1.3825 providing an even heavier and more sustained resistance level.
In terms of support the 1.3025-1.3035 looks to be a key level for the market. Adding
to the pain for the bulls is the now confirmed break of a the medium term down
trend. The next major (and final) bear trend line break will be the weekly
trend line, with current momentum we should make a first attempt at that trend line
around the 1.4200 mark.
What’s
Important?
ECB President Trichet will be the man to watch this
week with 2 speeches on Monday, the most important being his testimony before
the Committee on Economic and Monetary affairs at 09:00 EST.
Key Words
Trichet, Gfk German Consumer Climate, German
Unemployment Change.
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I just don't see the Russians coming to Europe's rescue. Scary thought though, isn't it? Probably not as scary as the English coming though. And they're a lot closer. "Propinquity" i think is the word.
pivotfarm just fucking R O C K S
hey, don't let E D get in your way, men,
remember the four(4) hour rule, bitchez.
So Velobabe is out of the closet.
no no you people are the ones that are fucked uppppppppppp
When you look around and everyone in the world appears to be crazy -- maybe it's not them.
out of rehab, no doubt
There's only one small problem with those projected levels and that is the 50% Fibonacci retracement at the 1.35-level. After meandering here at the beginning of the week, expect the EURUSD to retrace back to the 38% level (at least...) to 1.312.
Banging its head against the ceiling. Don't get suckered into any any long EUR bets going forward. If you're not short, you're waiting to get that way.
:D
Trichet,what a joke he is.Latest idea fineing states who go over budget,a bit late and will only make things worse.However what do the EU care,everyones bankrupt so what do they do,increase their budget by 6%.Look long and hard at an unaccountale empire where the accounts haven,t been signed off for 14 years because they are bent.If you think the banksters are bad,try the EU,great at spending other peoples money on countries that are basket cases who only ask for more.