The EUR/USD fluctuated heavily to the end of last week after gains across the week on eased woes that seemingly ran out of steam to the end of the week after renewed warnings from rating agencies for imminent downgrades.
The euro was attempting to hold the gains this week and the sentiment started to improve with jitters easing over the outlook after successful debt auctions last week and a steady policy from the ECB with no clear reference for more easing alongside assurances from Draghi that the liquidity measures and helping markets with tentative signs of stability.
Nevertheless, all the hopes came to halt with the end of the week with rating agencies again raising the heat. Already throughout the week comments from Fitch were generally targeting the risk that Italy faces and the likely rating cut and that was reiterated by S&P on Friday that sent markets frantically lower and also the euro.
This week the weak data flow from the euro area will leave the focus on the debt crisis with more auctions and eyes on rating agencies, especially after Fitch earlier said that the review might be concluded around January 15 and with S&P’s warning investors will remain sensitive to any comments and eyes the auctions closely with Spain, France, Portugal and Greece heading to the market.
From the U.S. front heavy data is awaited yet generally we expect good industrial and housing data and if the sentiment remains fragile and good figures are provided from the U.S. the attempts for the euro to stabilize last week will be dethroned and the bearishness will take hold once again assuring that it was only false attempts as unless the euro stabilizes this week higher then we can surely say the bearishness is back.
The release of the data this week will be as follows:
Monday January 16:
Both economies do not have fundamentals queued for release and the movement will be based on the market sentiment.
10:00 GMT Slovakia sells bills
10:30 GMT Netherlands sell bills
14:00 GMT France to sells bills
Tuesday January 17:
The euro area will start the data at 10:00 GMT with the December inflation figures, where the CPI index is expected with 0.4% rise on the month after 0.1% gain and on the year to confirm the flash estimate and fall to 2.8% from 3.0% while core CPI inflation to hold at 1.6%.
At the same time we have the ZEW Economic Sentiment for January to see if there is any improvement from December’s -54.1.
Germany will also release the ZEW Survey for January at 10:00 GMT as the Current Situation index is expected to fall to 24.5 from 26.8 while the Economic Sentiment Index is expected to improve to -49.8 from -53.8.
As for the United States, the day will start at 13:30 with the January Empire Manufacturing index which is expected with improvement to 10.50 from 9.53.
09:30 GMT Spain sells bills
10:00 GMT Greece sells bills
10:30 GMT Belgium sells bills
Wednesday January 18:
The euro area Construction Output for November is due at 10:00 GMT after it dropped 1.4% in October and on the year was down 2.8%.
As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.
At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.
At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.
10:15 GMT Germany sells bills
10:30 GMT Portugal sells bills
10:30 GMT Belgium sells bills
Thursday January 19:
The ECB will release the monthly report for January at 09:00 GMT. At the same time we have the Current Account for November which is likely to improve from the previous recorded 7.5 billion euro deficit in October after the reported huge trade surplus on the back of exports gains.
The U.S. economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16, where they will be available at 13:30 GMT. At 14:45 GMT, Chicago purchasing manager is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.
The U.S. will start the data at 13:30 GMT with the Inflation Report. The CPI index is expected with 0.1% rise on the month after holding unchanged the previous month and on the year to slow to 3.1% after 3.4%. Excluding food and energy the index is expected with 0.1% rise on the month after 0.2% gain and on the year to hold at 2.2%.
December Housing Starts index is also due the same time and expected flat at 685,000 while Building Permits are expected with 0.7% drop to 675,000 from 681,000.
As for the Jobless Claims for the week ending in January 14 it is also due at 13:30 GMT as usual after last week they rose 24,000 to 399,000 last week.
As for the Philadelphia Fed Index for January the index is due 15:00 GMT and expected to improve slightly to 11.0 from 10.3.
09:30 GMT Spain sells bills
Friday January 20:
Germany is due to release the Producer Price Index report for December at 07:00 GMT which is expected to hold at 0.1% rise on the month and on the year ease to 4.6% from 5.2%.
The United States is set to end the week with the Existing Home Sales for the month of December at 13:00 GMT where they are expected to extend the gain with 5.2% to 4.65 million from 4.42 million.