EUR/USD Fundamental Analysis May 31, 2012, Forecast

Analysis and Recommendations:

The EUR/USD fell to 1.2390 today, and is holding at 1.2400 a 22 month low and continuing to decline.

Intensifying concerns over Spain’s debt dampened the market sentiments, sending commodities and equities down. Euro hit a 23 month low after Spanish bond yields increased, raising worries that it may spiral up to unsustainable levels.

The euro has continued to spiral downwards and may break the 1.23 price today. While the USD on risk aversion safe haven mode, continues to climb with the Dollar Index was 82.98. The USD was hardly phased by disappointing housing data out today.

Commodities dropped as the USD gained. Spot gold hit a one week low earlier today stretching the previous session’s steep decline, tracking weakness in euro. In the MCX, however, gold was moving in the tight ranges. While, depreciating rupee provided lower level support, weakness seen in the international market capped gains. Market was waiting for fresh cues for further directional moves. Base metal complex in LME as well as in Shanghai were in red.  Base metals in LME dropped more than one per cent except for nickel and aluminum.  China indicating that it was unlikely to provide a massive stimulus measures to prop up economic growth weighed on the market too amid lingering concerns over euro zone debt crisis. Worries over China and Spain dragged down crude oil prices too. In Nymex prices fell below $90 a barrel while Brent crude oil below $106 a barrel.

US Pending Home Sales data came in well below forecast dropping 5.5%. Last month’s Pending Home Sales data indicated a recovery in the US housing market. For the month of April, it is expected to remain unchanged on a month on month basis, while on a year on year basis; it is estimated to grow by 22 per cent. Apart from home sales data, European Central Bank President is scheduled to speak at Brussels Think Tank. This event will be highly watched for its indications on moves to fight the persisting debt crisis. Meanwhile, rise in Spanish bonds yields fueled worries that it may spiral up to unsustainable levels, adding further to woes in Euro Zone. China’s comments over its proposed stimulus package to bolster economic growth hurt the investor sentiments further. As the week progresses, the coming days are expected to be more action packed with slew of economic data set to be released especially from the US including non-farm payrolls.   

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

Economic Data for May 30, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

May 30

 

JPY

 

 

 

BoJ Governor Shirakawa Speaks 

 

 

 

 

 

 

 

 

 

AUD

 

 

 

Construction Work Done (QoQ) 

5.5%

 

3.0% 

 

-3.4% 

   

 

 

AUD

 

 

 

Retail Sales (MoM) 

-0.2%

 

0.2% 

 

1.1% 

   

 

 

CHF

 

 

 

KOF Leading Indicators 

0.81

 

0.48 

 

0.43 

   

 

 

EUR

 

 

 

Italian 10-Year BTP Auction 

6.03%

 

 

 

5.66% 

 

 

 

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Date

Time

Currency

 

Previous

May 31

5:45

CHF

GDP q/q

0.1%

31st-3rd

EUR

German Retail Sales m/m

0.8%

6:45

EUR

French Consumer Spending m/m

-2.9%

7:55

EUR

German Unemployment Change

19K

9:00

EUR

CPI Flash Estímate y/y

2.6%

12:15

USD

ADP Non-Farm Employment Change

119K

12:30

USD

Prelim GDP q/q

2.2%

12:30

USD

Unemployment Claims

370K

13:45

USD

Chicago PMI

56.2

15:00

USD

Crude Oil Inventories

0.9M

Jun 1

TBD

GBP

Halifax HPI m/m

 

7:15

CHF

Retail Sales y/y

4.2%

7:30

CHF

SVME PMI

46.9

7:45

EUR

Italian Manufacturing PMI

43.8

8:30

GBP

Manufacturing PMI

50.5

9:00

EUR

Unemployment Rate

10.9%

12:30

USD

Non-Farm Employment Change

115K

12:30

USD

Unemployment Rate

8.1%

12:30

USD

Core PCE Price Index m/m

0.0%

12:30

USD

Personal Spending m/m

0.2%

12:30

USD

ISM Manufacturing PMI

0.3%

14:00

USD

S&P/CS Composite-20 HPI y/y

54.8

Government Bond Auctions

May 31  14:30  Sweden 

Jun 04  10:00  Norway 

Jun 05  00:30  Japan  Jun 05  09:30 

Jun 05 14:30  Sweden 

Jun 06  09:30  Germany 

Jun 06  09:30  Portugal 

Jun 06 14:30  UK 

Jun 07  00:30  Japan 

Jun 07  08:30  Spain 

Jun 07  08:50  France 

Jun 07  09:10  Sweden 

Jun 07  15:00  US 

Jun 08  10:00  Belgium 

Jun 08  15:30  Italy 

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