EUR/USD Forecast April 3, 2012, Technical Analysis

The EUR/USD pair fell during most of Monday’s session, but managed to bounce back in the end in order to form a hammer. The pair looks like it wants to go higher, but it should be mentioned that this pair will continue to suffer at the hands of headline risk going forward. Certainly, most people are painfully aware of the issues with European debt at the moment, but there are always going to be chances for the news to be worse than feared. After all, the market seems continent to simply overlook quite a bit. Those of you who traded in 2007 will undoubtedly remember what a market that refuses to come to grips with reality looks like when it finally has to. And that is the real fear that any bull has to have in the back of their mind.

The 1.3250 level has been rather supportive lately, and this makes sense as it was so resistive earlier. The level is a bit of a “midpoint” between the two larger ones, the 1.30 and 1.35 handles. Because of this, we aren’t as excited to be involved in this pair until we reach one of those larger levels. It is at these “bigger areas” that we find the best trades, and the most reliable ones for that matter.

The last few sessions have all produced hammers, so certainly the risk in the near term seems to be to the upside, and as a result the short-term trade may find value in going long for the next couple of days. However, as we are a bit more conservative, we prefer to see what this pair does at the 1.35 level, as it should continue to be a larger guide for the market overall.

Signs of weakness at that level are what we expect, and we wouldn’t hesitate to sell form it if we get them. Perhaps a shooting star or a bearish outside candle would be a nice signal from there. We think that a short from that position would have room to run, perhaps down to the 1.30 level. Again, the shorter-term trader may find a break of the Monday highs as a signal to buy, but we prefer to look at larger levels in markets that are as prone to shocks as this one has been lately. 

EUR/USD Forecast April 3, 2012, Technical Analysis
EUR/USD Forecast April 3, 2012, Technical Analysis

 

EUR/USD Fundamental Analysis April 3, 2012, Forecast

Analysis and Recommendations:

The EUR/USD fell in today’s session ending at 1.3323. The greenback was able to mount pressure on the euro on strong economic data. The ISM Economic research indicates that measures of global output may be behind the recent strength in U.S. inflation, said James Bullard, the president of the St. Louis Federal Reserve Bank. Bullard made the remarks in a speech.

The manufacturers report is considered a gauge that measures the strength of the manufacturing sector, produced by the Institute for Supply Management, rose to 53.4% last month from 52.4% in February. Reading over 50% indicates that more manufacturers are expanding than contracting.

Economic research indicates that measures of global output may be behind the recent strength in U.S. inflation, said James Bullard, the president of the St. Louis Federal Reserve Bank. Bullard made the remarks in a speech.

A gauge that measures the strength of the manufacturing sector, produced by the Institute for Supply Management, rose to 53.4% last month from 52.4% in February. Reading over 50% indicates that more manufacturers are expanding than contracting.

In the eurozone ISM reports were release for several of the larger manufacturing countries. The data showed Eurozone March final manufacturing PMI 47.7, French March final manufacturing PMI 46.7,Italian March manufacturing PMI 47.9, Spain March manufacturing PMI 44.5 Down from 45.0 in February and lowest read since December. Irish manufacturing PMI rises to 51.5 in March and Swiss March PMI 51.1 stronger than Reuter’s median forecast of 49.5.

Swiss February retail sales fell from 4.7% in January.

The head of Germany’s Ifo economic research institute, Hans-Werner Sinn, sees no end to the Eurozone’s sovereign debt crisis. “One has to fear that the current account deficits will remain for a longer time and that the debt crisis in the southern [European] states will worsen again,” Sinn told German business weekly Wirtschaftswoche in an interview published today.

The final straw for the euro was the Eurozone unemployment, which showed Eurozone February unemployment increased to 10.8 % as expected from 10.7% in January.

Economic Data for April 2, 2012 actual v. forecast

00:00

 

KRW

 

 

 

South Korean CPI (YoY) 

2.6%

 

3.1% 

 

3.1% 

 

 

00:50

 

JPY

 

 

 

Tankan Large Manufacturers Index 

-4

 

-1 

 

-4 

 

 

02:30

 

AUD

 

 

 

Building Approvals (MoM) 

-7.8%

 

0.3% 

 

1.1% 

   

06:05

 

INR

 

 

 

Indian Trade Balance 

-15.2B

 

-13.0B 

 

-14.8B 

 

 

08:00

 

DKK

 

 

 

Danish Retail Sales (YoY) 

-0.5%

 

-1.7% 

 

-3.3% 

   

08:15

 

CHF

 

 

 

Retail Sales (YoY) 

0.8%

 

3.2% 

 

4.7% 

   

08:30

 

CHF

 

 

 

SVME PMI 

51.1

 

49.5 

 

49.0 

 

 

08:50

 

EUR

 

 

 

French Manufacturing PMI 

46.7

 

47.6 

 

47.6 

 

 

08:55

 

EUR

 

 

 

German Manufacturing PMI 

48.4

 

48.1 

 

48.1 

 

 

09:00

 

EUR

 

 

 

Manufacturing PMI 

47.7

 

47.7 

 

47.7 

 

 

09:30

 

GBP

 

 

 

Manufacturing PMI 

52.1

 

50.5 

 

51.5 

   

10:00

 

EUR

 

 

 

Unemployment Rate 

10.8%

 

10.8% 

 

10.7% 

 

 

15:00

 

USD

 

 

 

ISM Manufacturing Index 

53.4

 

53.0 

 

52.4 

 

 

 

Economic Events scheduled for April 3, 2012 that affect the European and American Markets

T.B.D     GBP       Halifax House Price Index (MoM)         -0.3%                     -0.5%    

The Halifax House Price Index measures the change in the price of homes and properties financed by Halifax Bank of Scotland (HBOS), one of the U.K.’s largest mortgage lenders. It is a leading indicator of health in the housing sector.

10:00    EUR        GDP (QoQ)                                                 -0.3%                     -0.3%

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health. 

19:00     USD       FOMC Meeting Minutes

The Federal Open Market Committee (FOMC) Meeting Minutes are a detailed record of the committee’s policy-setting meeting held about two weeks earlier. The minutes offer detailed insights regarding the FOMC’s stance on monetary policy, so currency traders carefully examine them for clues regarding the outcome of future interest rate decisions.

 

Government Bond Auctions (this week)

Apr 03  09:30  Belgium  Auctions 3 & 6M T-bills

Apr 03  09:30  UK  Conventional Gilt Auction

Apr 04  08:30  Spain  Bono auction

Apr 04  14:30  Sweden  Details T-bill auction on Apr 11

Apr 05  08:50  France  OAT auction

Apr 05  15:00  US Announces auctions 

Apr 05  15:30  Italy   Details BOT on Apr 11 & BTP/CCTeu on Apr 12

In The Eyes of the Experts – 2/4/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • JPY
  • GBP

 

Currencies watch for Short:

  • AUD
  • NZD

 

Today’s important times (GMT+2):

  • 15:00 USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.3272    1.3304    1.3340    1.3371    1.3407   
GBPUSD 1.5911 1.5952 1.5994 1.6034 1.6076
USDJPY 81.44 82.11 82.48 83.15 83.52
USDCHF 0.8981 0.9003 0.9029 0.9051 0.9077
USDCAD 0.9928 0.9950 0.9974 0.9996 1.0021
AUDUSD 1.0308 1.0332 1.0373 1.0397 1.0438

EUR/USD Forecast April 2, 2012, Technical Analysis

The EUR/USD pair rose during the session on Friday in order to trigger the buy signal by breaking above the top of the hammer from the Thursday session. The 1.3250 level below is a support level, as it was also recently resistance. The 1.35 level above is a substantial resistance area, and with all of the issues in Europe at the moment, we aren’t big fans of holding this pair to the long side for great lengths of time. The candle for the day also featured a bit of a pullback from the highs, so it is obvious that traders are a bit leery of holding Euros over the weekend as well – not a good sign of confidence.

None the less, we think the short term move for this pair is probably up, but any longs would be of the short-term variety as there are so many headlines that could come out of Europe in order to push this pair back down. While the short-term can be long, we actually prefer to sell this pair in one of two scenarios: A break below the bottom of the hammer printed on Thursday, or a sign of weakness at the above 1.35 level.

The breaking of the 1.35 level would give us more confidence in owning this pair longer-term, but the reality is that there are concerns with bond spreads in the EU, and the banks in that region are certainly going to be difficult to own as well since they are so heavily exposed to bad debt. The region will more than likely go into a recession, and some are even thinking that it will be a severe one that could take a few years to climb out of. 

Over all, we prefer to sell the Euro all things being equal, but we also must acknowledge that the short-term action looks fairly bullish. This is why we prefer to simply wait for one of our selling scenarios to pop up as we believe those trades will be the type we can hang onto for much longer than buying. 

EUR/USD Forecast April 2, 2012, Technical Analysis
EUR/USD Forecast April 2, 2012, Technical Analysis

EUR/USD Forecast for the Week of April 2, 2012, Technical Analysis

The EUR/USD pair fell for much of the week only to turn around and pop back up and form a hammer. The hammer is sitting on the 1.3250 support mark, and as a result we think the next move is up. However, there is a massive resistance area at 1.35, and we feel that longer-term traders will have to be concerned about that level for the short-term. In truth, the 1.35 level is the real fight, and it will be a battle there to say the least. Any longs will have to be protected at that point. The breaking of the top of this past week’s candle could serve as a place to buy. If we break the bottom of the candle – this pair could be a big sell.

EUR/USD Forecast for the Week of April 2, 2012, Technical Analysis
EUR/USD Forecast for the Week of April 2, 2012, Technical Analysis

EUR/USD Weekly Fundamental Analysis April 2-6, 2012, Forecast

Introduction: 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.

  • 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

 

Analysis and Recommendation:

The EUR/USD ended the week and the quarter surprisingly high, at 1.3341. In earlier forecasts, the euro looked like it would fall to trade under the 1.32 range, although the common currency showed strength and resilience this week. The pair ranged from a high of 1.3386 to a low just under the 1.32 number at 1.3192. The weekly average was 1.3325.

The pair is still forecast to continue to fall.

The euro found its reprieve in the agreement reached in Copenhagen on Friday to increase the EFSF and ESM to about 1 trillion euros. This should be enough to provide the protection demanded by the G20 nations and to assure investors that the EU, ECB and IMF could not deal with any situations that arise.

Historical:

Highest: 1.5091 USD on 03 Dec 2009.

Average: 1.3709 USD over this period.

Lowest: 1.19 USD on 07 Jun 2010.

Economic Reports March 25-30, 2012 that affect the Eurozone actual v. forecast

 EUR

 

German Business Expectations

102.7

102.6

102.4

 

 EUR

 

German Current Assessment

117.4

117.0

117.4

 

 EUR

 

German Ifo Business Climate Index

109.8

109.7

109.7

 

 EUR

 

ECB President Draghi Speaks 

 

 

 

 

 EUR

 

GfK German Consumer Climate

5.9

6.2

6.0

 

 GBP

 

CBI Distributive Trades Survey

0

-4

-2

 

 GBP

 

BoE Gov King Speaks 

 

 

 

 

 EUR

 

French GDP (QoQ)

0.2%

0.2%

0.2%

 

 GBP

 

GDP (QoQ)

-0.3%

-0.2%

-0.2%

 

 GBP

 

Current Account

-8.5B

-8.4B

-10.5B

 

 GBP

 

Business Investment (QoQ)

-3.3%

-5.4%

-5.6%

 

 EUR

 

German CPI (MoM) 

0.3%

0.3%

0.7%

 

 GBP

 

Nationwide HPI (MoM)

-1.0%

0.2%

0.4%

 

 EUR

 

German Unemployment Change

-18K

-10K

-3K

 

 EUR

 

German Unemployment Rate

6.7%

6.8%

6.8%

 

 EUR

 

Italian 10-Year BTP Auction

5.24%

 

5.50%

 

 EUR

 

French Consumer Spending (MoM)

3.0%

0.2%

-0.4%

 

 CHF

 

KOF Leading Indicators

0.08

0.08

-0.11

 

 EUR

 

CPI (YoY) 

2.6%

2.5%

2.7

 

 

Economic Reports March 25-30, 2012 that affect the Americas actual v. forecast

 USD

 

Fed Chairman Bernanke Speaks 

 

 

 

 

 

 USD

 

Pending Home Sales (MoM)

-0.5%

1.0%

2.0%

 

 

 CAD

 

BoC Gov Carney Speaks 

 

 

 

 

 

 USD

 

CB Consumer Confidence

70.2

70.3

71.6

 

 

 USD

 

Fed Chairman Bernanke Speaks 

 

 

 

 

 

 USD

 

FOMC Member Fisher Speaks 

 

 

 

 

 

 USD

 

Durable Goods Orders (MoM)

2.2%

3.0%

-3.6%

 

 

 USD

 

Core Durable Goods Orders (MoM)

1.6%

1.5%

-3.0%

 

 

 USD

 

Continuing Jobless Claims

3340K

3365K

3381K

 

 

 USD

 

GDP (QoQ)

3.0%

3.0%

3.0%

 

 

 USD

 

Initial Jobless Claims

359K

350K

364K

 

 

 USD

 

GDP Price Index (QoQ)

0.9%

0.9%

0.9%

 

 

 USD

 

Fed Chairman Bernanke Speaks 

 

 

 

 

 

 USD

 

Personal Spending (MoM)

0.8%

0.6%

0.4%

 

 

 CAD

 

GDP (MoM)

0.1%

0.1%

0.5%

 

 

 USD

 

Core PCE Price Index (MoM)

0.1%

0.1%

0.2%

 

 

 USD

 

Chicago PMI

62.2

63.1

64.0

 

 

 USD

 

Michigan Consumer Sentiment Index

76.2

75.1

74.3

 

 

   

Last week’s market highlights

The Good Stuff

  • Eurozone Finance Ministers finalizes the temporary combination of the EFSF and ESM. Italy and Spain get to contribute to their own bailout fund if needed
  • German unemployment falls more than expected and rate falls to lowest since reunification
  • German IFO business confidence up slightly to the highest since July
  • Italian business confidence up slightly from lowest since Dec ’09 and consumer confidence rises to 8 month high
  • Consumer confidence rises a touch to best since Feb ’11
  • Personal Spending in Feb rises .8% m/o/m, above estimates of up .6%
  • UK said purchase apps rose 3.3% to a 10 week high.
  • Crude finally drops but not enough

 

The Disappointing

  • Inflation expectations in both the Michigan (3.9%) and Conference Board (6.3%)confidence figures rise to the highest since May,
  • Chicago, Richmond, Dallas and KC manufacturing survey’s all fall more than expected in Mar from Feb
  • Real income falls in Feb by .1%, savings rate drops to 3.7%, the lowest since Aug ’09
  • Initial Jobless Claims 4 week avg 365k after benchmark revisions vs 355k prior
  • Feb Durable Goods orders grow less than expected after Jan’s weakness
  • UK said refinances fell 4.6% to lowest since early Dec
  • Home price index falls to cheapest since Jan ’03
  • Pending Home Sales in Feb unexpectedly falls .5% but from most since Apr ’10
  • German retail sales in Feb fall for 4th month in past 5
  • Shanghai index closes down for the 3rd straight week due to continued concerns with economic growth
  • Bernanke Feds will do more, possible monetary easing
  • Gasoline prices rise another .035 on the week to $3.93.

 

 Economic Highlights of the coming week that affect the Euro, the USD and the Franc.

Apr. 02

08:15

 

CHF

 

 

 

Retail Sales (YoY) 

 

 

 

 

-14.8B 

 

 

 

08:30

 

CHF

 

 

 

SVME PMI 

 

 

 

 

 

 

 

 

08:50

 

EUR

 

 

 

French Manufacturing PMI 

 

 

 

 

 

 

 

 

08:55

 

EUR

 

 

 

German Manufacturing PMI 

 

 

 

 

 

 

 

 

09:00

 

EUR

 

 

 

Manufacturing PMI 

 

 

 

 

 

 

 

 

10:00

 

EUR

 

 

 

Unemployment Rate 

 

 

 

 

 

 

 

 

15:00

 

USD

 

 

 

ISM Manufacturing Index 

 

 

 

 

 

 

 

Apr. 03

10:00

 

EUR

 

 

 

GDP (QoQ) 

 

 

 

 

 

 

 

 

19:00

 

USD

 

 

 

FOMC Meeting Minutes 

 

 

 

 

 

 

 

Apr. 04

10:00

 

EUR

 

 

 

Retail Sales (MoM) 

 

 

 

 

 

 

 

 

11:00

 

EUR

 

 

 

German Factory Orders (MoM) 

 

 

 

 

 

 

 

 

12:45

 

EUR

 

 

 

Interest Rate Decision 

 

 

 

 

 

 

 

 

13:15

 

USD

 

 

 

ADP Nonfarm Employment Change 

 

 

 

 

 

 

 

 

13:30

 

EUR

 

 

 

ECB Press Conference 

 

 

 

 

 

 

 

 

15:00

 

USD

 

 

 

ISM Non-Manufacturing Index 

 

 

 

 

 

 

 

Apr. 05

08:15

 

CHF

 

 

 

CPI (MoM) 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Initial Jobless Claims 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Continuing Jobless Claims 

 

 

 

 

 

 

 

Apr. 06

13:30

 

USD

 

 

 

Average Hourly Earnings (MoM) 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Nonfarm Payrolls 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Unemployment Rate 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Private Nonfarm Payrolls 

 

 

 

 

 

 

 

 

Summary of this week’s highlights for the European and US Markets

In the United Kingdom, the March purchasing manager index for manufacturing is on tap.

The same release is due in Europe for the European Monetary Union.

EU unemployment rate data for February will also be released.

PMI construction data for March is awaited in the UK, along with the BRC shop price index for the month.

EU producer price index data is also due.

In the UK, the March purchasing manager index for services is expected to be released.

The European Central Bank will wrap up a busy day with a meeting to decide on the current level of interest rates in the currency bloc.

Industrial production data for February is due in the UK, along with manufacturing production data for the period.

NIESR will release its quarterly gross domestic product estimate for March.

Elsewhere, the Bank of England will meet to discuss the level of interest rates for March.

This week in the USA

Monday sees the release of the ISM manufacturing index for March in the US. The index is expected to have risen 1.1 points during the month to 53.5.

February construction spending data is also due.

Tuesday brings US car sales data for March, along with factory orders figures for February.

On Wednesday, the ADP employment report for March will be published in the US, alongside the ISM non-manufacturing index for the month.

The weekly Energy Information Administration petroleum status report will also be announced

In the US on Thursday, jobless claims data is awaited.

The March employment situation report is due in the US, along with consumer credit change data for February.

Economists expect the jobs data to show a 230,000 lift in private sector jobs for the month, with total non-farm payrolls lifting by 225,000, leaving the jobless rate unchanged at 8.3 per cent.

On Friday, most western markets will be closed for the Good Friday public holiday.

Government Bond Auctions this week

Apr 03  09:30  Belgium  Auctions 3 & 6M T-bills

Apr 03  09:30  UK  Conventional Gilt Auction

Apr 04  08:30  Spain  Bono auction

Apr 04  14:30  Sweden  Details T-bill auction on Apr 11

Apr 05  08:50  France  OAT auction

Apr 05  15:00  US Announces auctions 

Apr 05  15:30  Italy   Details BOT on Apr 11 & BTP/CCTeu on Apr 12

Economic Indicators And Reports For The Last Day Of The Week, Month And Quarter.

These are the notes from my desk as the day passed ending with US markets and moving back to European markets and all the way back to Asia.

These are simply notes that I collected throughout the day from numerous sources.

Consumer sentiment in March reached the highest in more than a year, as consumers grew more confident about their current economic conditions.

The University of Michigan said the final reading for the consumer-sentiment gauge in March hit 76.2 — the highest since February 2011. Last month sentiment was at 75.3.

The Chicago PMI, or Chicago business barometer by its formal name, decelerated in March but marked its fifth straight month above 60%. The PMI fell to 62.2% in March from 64.0% in February, 

Americans spent money in February at the fastest pace in seven months, but a good chunk of their cash went to pay for higher energy costs and incomes rose at a much slower clip, government data showed.

Personal spending jumped 0.8% in February as personal income edged up 0.2%, the Commerce Department said.

With income growth unable to keep up, the faster pace of spending in the first two months of 2012 pushed down the personal savings rate to 3.7% in February from 4.7% at the end of 2011. That’s the lowest savings rate since August 2009.

Euro-zone finance ministers meeting in Copenhagen on Friday agreed to temporarily boost the size of the firewall designed to contain the spread of the region’s debt crisis to 800 billion euros ($1.1 trillion) from a previously planned 500 billion euros.

International Monetary Fund Managing Director Christine Lagarde on Friday said she welcomed the decision by euro-zone finance ministers to temporarily boost the effective lending capacity of the region’s bailout funds to 700 billion euros 

Spanish government bond prices added to gains Thursday, pushing down yields, after Spain announced 27 billion euros ($36 billion) of austerity cuts in its 2012 budget. 

Greek Prime Minister Lucas Papademos on Friday said the country was working to ensure it won’t need a third bailout but said the potential need for further aid couldn’t be ruled out, news reports said. “Some form of financial assistance might be required.

France posted a 2011 budget deficit equal to 5.2% of gross domestic product, coming in under the government’s initial target of 5.7%, French President Nicolas Sarkozy reported.

Inflation in the 17-nation euro zone slowed to a 2.6% annual pace in March, down from 2.7% in February, the European Union statistical agency Eurostat released today.

China’s central bank said Friday it will maintain a reasonable expansion of social financing, a measure of overall new credit, as it pursues prudent monetary policies this year.

The People’s Bank of China said it will also ensure relatively fast and steady economic growth, while keeping overall prices stable.

The central bank’s statement, posted on the website of its Shanghai branch, repeated standard language on its policy stance and mentioned no specific targets.

Total social financing is a measure designed by the central bank and launched in the first quarter of 2011 to better gauge the supply of credit in the economy beyond the traditional measure of new yuan loans.

Speculation is growing that China will trim the ratio of cash that its lenders must keep in reserve to encourage credit growth, amid signs the world’s fastest-growing major economy is losing steam.

The RBA is expected to slash its cash rate by 73 basis points over the next 12 months, according to the Overnight Index Swap curve, narrowing the gap with New Zealand’s record low official cash rate of 2.5 per cent.

New Zealand’s central bank is seen lifting the OCR by 26 basis points in the next 12 months.

Fitch on Thursday cut its view on Japan’s 2012 economic growth outlook to 1.9% from its December forecast of 2.2% growth, citing statistical changes in base year calculations using national accounts. 

Japan’s industrial output data for February offered a mixed picture Friday, with production down but expectations trending higher. Industrial production fell 1.2% last month, the Ministry of Economy, Trade and Industry said. The result was far below forecasts for a 1.3% gain.

Japanese data surprised to the upside Friday, as consumer prices rose, unemployment eased, and household spending increased more than expected. The February jobless rate slipped to 4.5% from January’s 4.6%, the Internal Affairs Ministry reported.

 

EUR/USD Fundamental Analysis April 2, 2012, Forecast

Analysis and Recommendations:

The EUR/USD ended the week, the month and the quarter on a surprise note, closing at 1.3332 gaining strength after Euro-zone finance ministers meeting in Copenhagen agreed to temporarily boost the size of the firewall designed to contain the spread of the region’s debt crisis to 800 billion euros ($1.1 trillion) from a previously planned 500 billion euros.

International Monetary Fund Managing Director Christine Lagarde on Friday said she welcomed the decision by euro-zone finance ministers to temporarily boost the effective lending capacity of the region’s bailout funds to 700 billion euros. 

Spanish government bond prices added to gains Thursday, pushing down yields, after Spain announced 27 billion euros ($36 billion) of austerity cuts in its 2012 budget. 

Ending the month, the US issued several economic reports all had positive sentiment, but the USD was unable to muster strength against the euro after the Copenhagen agreement.

Greek Prime Minister Lucas Papademos on Friday said the country was working to ensure it won’t need a third bailout but said the potential need for further aid couldn’t be ruled out, news reports said. “Some form of financial assistance might be required.

France posted a 2011 budget deficit equal to 5.2% of gross domestic product, coming in under the government’s initial target of 5.7%, French President Nicolas Sarkozy reported.

Inflation in the 17-nation euro zone slowed to a 2.6% annual pace in March, down from 2.7% in February, the European Union statistical agency Eurostat released today.

In the US, consumer sentiment in March reached the highest in more than a year, as consumers grew more confident about their current economic conditions.

The University of Michigan said the final reading for the consumer-sentiment gauge in March hit 76.2 — the highest since February 2011. Last month sentiment was at 75.3.

The Chicago PMI, or Chicago business barometer by its formal name, decelerated in March but marked its fifth straight month above 60%. The PMI fell to 62.2% in March from 64.0% in February, 

Americans spent money in February at the fastest pace in seven months, but a good chunk of their cash went to pay for higher energy costs and incomes rose at a much slower clip, government data showed.

Personal spending jumped 0.8% in February as personal income edged up 0.2%, the Commerce Department said.

With income growth unable to keep up, the faster pace of spending in the first two months of 2012 pushed down the personal savings rate to 3.7% in February from 4.7% at the end of 2011. That’s the lowest savings rate since August 2009.

The euro jump seems to be an overreaction by investors, and the markets should see a correction developing on Monday, pushing the euro under the 1.32 level.

 

Economic Reports March 30, 2012 actual v. forecast

 

JPY

 

 

 

Unemployment Rate 

4.5%

 

4.6% 

 

4.6% 

 

 

 

JPY

 

 

 

Tokyo Core CPI (YoY) 

-0.3%

 

-0.3% 

 

-0.3% 

 

 

 

JPY

 

 

 

Industrial Production (MoM) 

1.9%

 

1.4% 

 

1.9% 

 

 

 

AUD

 

 

 

HIA New Home Sales (MoM) 

3.0%

 

 

 

-7.3% 

 

 

 

EUR

 

 

 

French Consumer Spending (MoM) 

3.0%

 

0.2% 

 

-0.4% 

 

 

 

CHF

 

 

 

KOF Leading Indicators 

0.08

 

0.08 

 

-0.11 

   

 

NOK

 

 

 

Norwegian Retail Sales (MoM) 

1.00%

 

-0.50% 

 

1.10% 

 

 

 

EUR

 

 

 

CPI (YoY) 

2.6%

 

2.5% 

 

2.7% 

 

 

 

EUR

 

 

 

Greek Retail Sales (YoY) 

-10.30%

 

 

 

-12.60% 

   

 

USD

 

 

 

Core PCE Price Index (MoM) 

0.1%

 

0.1% 

 

0.2% 

 

 

 

CAD

 

 

 

GDP (MoM) 

0.1%

 

0.1% 

 

0.5% 

   

 

USD

 

 

 

Personal Spending (MoM) 

0.8%

 

0.6% 

 

0.4% 

   

 

USD

 

 

 

Chicago PMI 

62.2

 

63.1 

 

64.0 

 

 

 

USD

 

 

 

Michigan Consumer Sentiment Index 

76.2

 

75.1 

 

74.3 

 

 

 

Economic Events for Monday, April 2, 2012 Europe and America

08:15                    CHF        Retail Sales (YoY)          

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                       

08:30                     CHF        SVME PMI                                                                                                          

 08:50                   EUR        French Manufacturing PMI       

 08:55                    EUR        German Manufacturing PMI                     

09:00                     EUR       Manufacturing PMI                                                                                                      

 09:30                   GBP       Manufacturing PMI      

Manufacturing Purchasing Managers Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.                                                                                     

 10:00                    EUR        Unemployment Rate

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. The data tends to have a muted impact as there are several earlier indicators related to labor conditions in the euro zone.        

15:00                    USD       ISM Manufacturing Index

The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) rates the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. 
The data is compiled from a survey of approximately 400 purchasing managers in the manufacturing industry. 
On the index, a level above 50.0 indicates industry expansion, below indicates contraction.        

Government Bond Auctions (this week)

Apr 03  09:30  Belgium  Auctions 3 & 6M T-bills

Apr 03  09:30  UK  Conventional Gilt Auction

Apr 04  08:30  Spain  Bono auction

Apr 04  14:30  Sweden  Details T-bill auction on Apr 11

Apr 05  08:50  France  OAT auction

Apr 05  15:00  US Announces auctions 

Apr 05  15:30  Italy   Details BOT on Apr 11 & BTP/CCTeu on Apr 12

In The Eyes of the Experts – 30/3/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • JPY
  • NZD

 

Currencies watch for Short:

  • EUR
  • CAD

 

Today’s important times (GMT+2):

  • 14:30 : CAD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.3209 1.3261 1.3303 1.3354 1.3397
GBPUSD 1.5821 1.5887 1.5925 1.5992 1.6029
USDJPY 81.37 81.83 82.34 82.79 83.31
USDCHF 0.8998 0.9025 0.9059 0.9086 0.9119
USDCAD 0.9924 0.9946 0.9981 1.0003 1.0039
AUDUSD 1.0227    1.03193    1.03576    1.04113    1.0449   

EU Finance Ministers Agree to Increase Firewall to 940billion Euro

EMU  finance ministers will raise the combined firepower of the region’s two bailout funds to a potential €940bn from 500bn today, a draft statement showed.

Together they will increase the EFSF/ESM safety net to at least €700bn and pledge an extra 240bn if required that could be used until mid-2013, according to the statements published

The 17 ministers today will make issue the formal release after their meeting Copenhagen, the option is a  compromise between Germany’s reluctance to pledge more money for euro area bailouts and the need to reassure markets that money invested in eurozone bonds is safe.

Increasing the eurozone’s financial safety net is a pre-condition for most countries from the G20 group of the biggest developed and developing economies to contribute more money to the International Monetary Fund, to further calm markets.

Germany, the eurozone’s dominant economy, has been against increasing the bailout capability in advance, saying it was ready to give more money when needed and noting markets have calmed down from the peak of the debt crisis.

Investors concerns about Spain, which badly missed its budget deficit target in 2011 and negotiated a softer target for 2012 with eurozone ministers, have sent the country’s bond yields higher and put the bailout capability discussion back on the table. Today, Spain is scheduled to release their new draft budget.

Together, the ESM and the existing EFSF program would therefore create a firewall of €700bn.

But if the €700bn were to prove insufficient to finance bailouts in the period between July 2012 and July 2013, eurozone leaders can agree to raise that amount by the yet uncommitted lending capability of the EFSF — €240bn.

The ESM’s capacity will be based on €80bn of paid-in capital and €620bn of callable capital. The first agreement was the paid-in capital would be supplied over 5 years. To help the ESM reach maximum capacity earlier, eurozone leaders agreed to pay in the cash over 4 years, with the 1st 2 tranches delivered already in 2012. This would give the ESM a preliminary lending capacity of €200bn in 2012, €400bn in 2013 and the full five hundred in 2014.

Eurozone officers note nevertheless that should the ESM need its full lending capacity earlier, the capital can be raised swiftly.

The ministers are also to assert that they’re going to continue to check the adequacy of the ESM capital “as appropriate” and “in particular when used EFSF guarantees are liberated once the financial aid is repaid”. 

 

A Bit of Life for the Euro as the Month Ends

The euro came back to life against the dollar and yen in Asia on Friday after slipping against the greenback as eurozone finance ministers prepare for high-level debt talks. 

The euro bought $1.3347 and 109.54 yen in Tokyo trade, compared with $1.3301 and 109.64 yen in New York. 

The dollar edged down to 82.04 yen from 82.42 yen in New York, temporarily falling below 82 yen in earlier trade to touch 81.95

Finance ministers from the 17-nation currency bloc meet on Friday and Saturday in Copenhagen to discuss expanding the region’s debt firewall by combining the European Financial Stability Facility, used to rescue Portugal, Ireland and Greece, with the permanent European Stability Mechanism. 

The move would temporarily raise the size of the rescue mechanism to 940 billion euros, seen as necessary to stem market volatility tied to the eurozone’s fiscal woes. 

But member countries are divided over how much should be laid aside, with France and the European Commission eyeing near to a trillion euros while Germany, Europe’s top economy and paymaster, remains much more cautious. 

Europe’s partners from Washington to Tokyo and including groups such as the International Monetary Fund want to see the bloc ring-fenced as effectively as possible against a new crisis that would affect the world economy. 

The euro was higher on some buyback following falls in New York on Thursday, but “many remain skeptical over the eurozone’s economic outlook. The overall view of the euro is negative and that the finance ministers will not develop a firewall that is acceptable to those outside of the eurozone.

Germany seems to want to keep everything on a wait to see program.

The G20 nations are pushing the EU to handle the crisis now.

Oil and Gold continue to fall.

EUR/USD Forecast March 30, 2012, Technical Analysis

 

The EUR/USD pair fell during the session on Thursday as the fears of a Spanish meltdown are starting to pick back up. The spread between Spanish and German bonds is at just under 19% on average now, and this suggests that the Spanish bond markets are about to become rather stressed.

The market has risen lately though, but in the biggest picture this seems to be a continuation of the larger consolidation between the 1.35 and 1.30 levels. The 1.3250 level is an area as well, and the breaking out of the pair to the upside of this level and the pullback to prove support would have many traders thinking that the pair is a long now. The hammer for the Thursday session looks healthy, but the reality is that the pair hasn’t been able to gain serious traction after the initial knee-jerk reaction to the comments by Ben Bernanke that rates in America would remain as low as possible for as long as possible. The gains have almost been erased as the market has been bearish over the last several sessions.

The fundamental picture in Europe is still very risky, and it is hard to believe that the issues in that region will be avoided over time. The whole situation in Europe seems to be an attempt to buy time for the financial institutions to shield themselves from the inevitable meltdown in some of the debt markets.

The breaking of the top of the Thursday candle is a buying signal, but we see the real risk is to the downside. We are looking to sell in general, and we prefer to do it based upon a breaking of the lows from the Thursday session. A pop will have us ignoring it, and looking to sell in the vicinity of the 1.35 level as it looks so resistive. Any signs of weakness there will have us selling as well, and it isn’t until we close well above that on a daily chart that we are comfortable going long of the Euro. With this being said – we are simply waiting for sell signals.

EUR/USD Forecast March 30, 2012, Technical Analysis
EUR/USD Forecast March 30, 2012, Technical Analysis

EUR/USD Fundamental Analysis March 30, 2012, Forecast

Analysis and Recommendations:

The EUR/USD fell in today’s session as more worries surfaced over the Spanish financial crisis, as workers in Spain went on a national strike against the harsh austerity measures.

The euro fell as low as 1.3252 and is trading at the end of the European session at 1.3273

Spanish inflation eased slightly in March to its lowest level in over a year, preliminary data from the country’s statistics institute INE showed today.

Payment-in-kind arrangements in the Spanish mortgage market are likely to rise and could hurt the country’s lenders, but the full effect remains unclear, said Fitch Ratings. “Deed in lieu” arrangements, where banks take ownership of the property and borrowers mortgage loan obligations are terminated could do two things: result in lower loan losses than those seen in traditional auctions, or hurt performance by encouraging borrowers’ to “hand over the keys,” and cut off banks’ access to additional unsecured recoveries,

In a statement, the INE said the European Union-harmonized index of Spanish consumer prices rose at an annual rate of 1.8% in March, down from a 1.9% rate in February. The INE didn’t provide a reason for the small drop in prices. 

Elsewhere in Europe, the Paris-based Organization for Economic Cooperation and Development said economic growth in the Group of Seven industrial economies will pick up speed in the first half of 2012, but warned that the recovery remains fragile.

The Italian government sold 8 billion euros ($10.7 billion) of debt, including 5- and 10-year bonds, with borrowing costs falling from a month ago. Italy’s Treasury sold 2.5 billion euros of five-year debt at a yield of 4.18%

Germany’s seasonally-adjusted unemployment rate fell to 6.7% in March from 6.8% in February, the Federal Labor Agency reported today. Economists said the figure was the lowest since the current statistical series began in 1998.

EU leaders begin meeting on Friday to discuss building a strong firewall and funding the EFSF and EMS.

The euro is expected to continue falling.

In the US today, both the unemployment claims report and GDP were positive.

U.S. real gross domestic product for the fourth quarter rose at a 3.0% annualized rate, unrevised from the earlier estimate, the Commerce Department released the report.

The number of Americans who filed requests for jobless benefits fell by 5,000 last week to a seasonally adjusted 359,000, the U.S. Labor Department supporting claims of a jobs recovery in the US. 

 Economic Reports for March 29, 2012 with one last day of the month and 1st quarter.

 

JPY

 

 

 

Retail Sales (YoY) 

3.5%

 

1.4% 

 

1.8% 

 

 

 

NZD

 

 

 

Business Confidence 

33.80

 

 

 

28.00 

 

 

 

JPY

 

 

 

2-Year JGB Auction 

0.12%

 

 

 

0.11% 

 

 

 

GBP

 

 

 

Nationwide HPI (MoM) 

-1.0%

 

0.2% 

 

0.4% 

   

 

EUR

 

 

 

Spanish CPI (YoY) 

1.9%

 

1.9% 

 

2.0% 

 

 

 

DKK

 

 

 

Danish Unemployment Rate 

4.20%

 

4.00% 

 

4.00% 

 

 

 

HUF

 

 

 

Hungarian Quarterly Unemployment Rate 

11.60%

 

 

 

11.10% 

 

 

 

SEK

 

 

 

Swedish Retail Sales (MoM) 

1.20%

 

0.10% 

 

0.20% 

   

 

EUR

 

 

 

German Unemployment Rate 

6.7%

 

6.8% 

 

6.8% 

 

 

 

EUR

 

 

 

German Unemployment Change 

-18K

 

-10K 

 

-3K 

   

 

GBP

 

 

 

Index of Services 

0.3%

 

0.2% 

 

-0.1% 

   

 

GBP

 

 

 

M4 Money Supply (MoM) 

-1.9%

 

1.2% 

 

1.5% 

   

 

GBP

 

 

 

Mortgage Approvals 

49K

 

59K 

 

58K 

   

 

GBP

 

 

 

Net Lending to Individuals 

1.6B

 

1.5B 

 

1.8B 

 

 

 

GBP

 

 

 

Mortgage Lending 

1.20B

 

1.40B 

 

1.60B 

 

 

 

GBP

 

 

 

BOE Consumer Credit 

0.40B

 

0.20B 

 

0.20B 

 

 

 

EUR

 

 

 

Business and Consumer Survey 

94.4

 

96.0 

 

94.5 

   

 

EUR

 

 

 

Italian 10-Year BTP Auction 

5.24%

 

 

 

5.50% 

 

 

 

EUR

 

 

 

Italian 5-Year BTP Auction 

4.18%

 

 

 

4.19% 

 

 

 

CZK

 

 

 

Czech Interest Rate Decision 

0.75%

 

0.75% 

 

0.75% 

 

 

 

CAD

 

 

 

IPPI (MoM) 

0.2%

 

0.5% 

 

0.4% 

   

 

CAD

 

 

 

RMPI (MoM) 

-0.5%

 

0.5% 

 

0.2% 

   

 

USD

 

 

 

Initial Jobless Claims 

359K

 

350K 

 

364K 

   

 

USD

 

 

 

GDP Price Index (QoQ) 

0.9%

 

0.9% 

 

0.9% 

 

 

 

USD

 

 

 

GDP (QoQ) 

3.0%

 

3.0% 

 

3.0% 

 

 

 

USD

 

 

 

Continuing Jobless Claims 

3340K

 

3365K 

 

3381K 

   

 

USD

 

 

 

Bloomberg Consumer Confidence 

-34.7

 

 

 

-34.9 

 

 

 

USD

 

 

 

Natural Gas Storage 

57B

 

49B 

 

11B 

   

 

Economic Events Scheduled for March 30, 2012 ( last business day of the month )

T.B.D.    GBP      Nationwide HPI (MoM)                               0.2%       0.6%

The Nationwide Housing Price Index (HPI) measures the change in the selling price of homes with mortgages backed by Nationwide. It is the U.K.’s second earliest report on housing inflation.

07:45     EUR       French Consumer Spending (MoM)      0.2%       -0.4%     

French Consumer Spending measures the change in the inflation-adjusted value of all goods expenditures by consumers. Consumer spending accounts for the majority of economic activity.        

08:00     CHF       KOF Leading Indicators                            0.08        -0.12                    

The KOF Leading Indicators Index is designed to predict the direction of the economy over the following six months. The index is a composite reading of 12 economic indicators related to banking confidence, production, new orders, consumer confidence and housing.

10:00     EUR       CPI (YoY)                                                      2.5%       2.7%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

13:30     USD       Core PCE Price Index (MoM)                   0.1%       0.2%

13:30     USD       Personal Spending (MoM)                       0.6%       0.2%

The Core Personal Consumption spending (PCE) Price Index measures the changes in the price of goods and services purchased by consumers for the purpose of consumption, excluding food and energy. Prices are weighted according to total expenditure per item. It measures price change from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.         

14:45     USD       Chicago PMI                                                63.1         64.0

The Chicago Purchasing Managers’ Index (PMI) determines the economic health of the manufacturing sector in Chicago region. A reading above 50 indicates expansion of the manufacturing sector; a reading below indicates contraction. The Chicago PMI can be of some help in forecasting the ISM manufacturing PMI.                    

14:55     USD       Michigan Consumer Sentiment Index  75.1        74.3

The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.

13:30     CAD      GDP (MoM)                                                  0.1%       0.4%              

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health. Canada releases fresh GDP data on a monthly basis.

Government Bond Auctions (this week)

Mar 30  14:30  UK  Publication of the DMO Q2 Gilt operations calendar

Mar 31  n/a  Spain  IGCP deadline for Q2 T-bill issuance programme

Apr 03  09:30  Belgium  Auctions 3 & 6M T-bills

Apr 03  09:30  UK  Conventional Gilt Auction

Apr 04  08:30  Spain  Bono auction

Apr 04  14:30  Sweden  Details T-bill auction on Apr 11

Apr 05  08:50  France  OAT auction

Apr 05  15:00  US Announces auctions 

Apr 05  15:30  Italy   Details BOT on Apr 11 & BTP/CCTeu on Apr 12

 

 

 

US UNEMPLOYMENT AND GDP ECONOMIC REPORTS UPDATE

It has been an amazing day for the US economy.

The US unemployment reports recorded a drop of 5000 which means that more less workers are filing for unemployments claims. This supports the recovery of the US economy. Jobs are the backbone of the economy. If employees are not losing their jobs, they become more confident. If consumer confidence increases so does consumer spending, which in turn supports home sales, which supports housing starts, which supports manufacturing.. so on and so on and so on. What it comes down to is now that we have had several consecutive weeks of good news in the job center, it is no longer just a blip or an misnomer. It is a reality.

 

This data was also supported today, by information released by the Department of Commerce showing that growth in the US was at the predicted range of 3%. 

After Fed Chairman Bernanke’s warning last week it was worried that growth and jobs were out of sync.

Yesterday, the Durable Goods report was released, although it was below forecast of 2.9% increase it was a good showing at 2.2% supporting recovery and showing orders for manufacturing growing. The report also showed growth in all sectors. 

Later today, Fed Chairman Bernanke is scheduled to make a speech, investors will be waiting to see his tone in view of the last few economic indicators.

Gold continues to drop as well as Crude Oil.

In The Eyes of the Experts – 29/3/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • JPY
  • USD
  • GBP

 

Currencies watch for Short:

  • EUR
  • NZD
  • AUD

 

Today’s important times (GMT+2):

  • 14:30,18:45 : USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.3228    1.3276    1.3324    1.3373    1.3421   
GBPUSD 1.5775 1.5832 1.5897 1.5954 1.6019
USDJPY 82.29 82.56 82.86 83.13 84.43
USDCHF 0.8981 0.9012 0.9046 0.9078 0.9112
USDCAD 0.9920 0.9948 0.9973 1.0002 1.0027
AUDUSD 1.0306 1.0348 1.0397 1.0439 1.0488

EUR/USD Forecast March 29, 2012, Technical Analysis

The EUR/USD pair had a real back and forth session on Wednesday as the markets were somewhat skittish during the day. The 1.3250 level being supportive was important, but the reality is that the 1.35 level above is going to be real strong in its resistance, and as a result we are looking to fade any rallies up to that point. We aren’t interested in buying at all, as there are simply far too many problems in Europe at the moment. In fact, unless we close above that 1.35 handle on a daily chart – we aren’t buying at all. Selling will be of rallies to the 1.35 level, on a daily close below the 1.32 level. 

EUR/USD Forecast March 29, 2012, Technical Analysis
EUR/USD Forecast March 29, 2012, Technical Analysis

EUR/USD Fundamental Analysis March 29, 2012, Forecast

Analysis and Recommendations:

The EUR/USD collapsed today, falling from the high of 1.3372 to end the day at 1.3306. The pair traded in a tight range hanging close to the 1.33 level. It was a day of mixed signals from Europe, with several economic reports above and below forecast. French GDP came in as expected at 0.2% and German CPI held at 0.3%. In the US the Durable Goods report was up, but not as high as expected by economists. It was overall a positive report, showing increases in almost all sectors.

 Euro area countries are strongly considering paying cash into the currency union’s firewall faster in order to raise its ability to lend money to countries in trouble, a senior European Union official said Wednesday.

The flight from the euro was a flight to safety, after more worries began to surface for Spain. In a report published today,” The risk of a Spanish debt restructuring is higher now than it’s been since the beginning of the crisis”, said Citigroup Inc. chief economist William Buiter. “Spain looks likely to enter some form of a troika program this year, as a condition for further European Central Bank support for the Spanish sovereign and/or Spanish banks,” said the former Bank of England Monetary Policy Committee member. A week ago, Buiter told Bloomberg TV that he was increasingly worried about a default for Spain.

 Italian Prime Minister Mario Monti reportedly said Wednesday that there was little euro-zone contagion risk from Spain’s deficit worries, and that that country is on a “steady course of budget consolidation.”

Commodities fell today as crude oil and gold feel from their perch.

Economic Data March 28, 2012 actual v. forecast

 

EUR

 

 

 

French GDP (QoQ) 

0.2%

 

0.2% 

 

0.2% 

 

 

 

EUR

 

 

 

M3 Money Supply (YoY) 

2.8%

 

2.5% 

 

2.5% 

 

 

 

EUR

 

 

 

Private Loans (YoY) 

0.7%

 

1.3% 

 

1.1% 

 

 

 

EUR

 

 

 

Italian Business Confidence 

92.1

 

91.7 

 

91.7 

   

 

GBP

 

 

 

Business Investment (QoQ) 

-3.3%

 

-5.4% 

 

-5.6% 

 

 

 

GBP

 

 

 

Current Account 

-8.5B

 

-8.4B 

 

-10.5B 

   

 

GBP

 

 

 

GDP (QoQ) 

-0.3%

 

-0.2% 

 

-0.2% 

 

 

 

EUR

 

 

 

Italian 6-Month BOT Auction 

1.12%

 

 

 

1.20% 

 

 

 

USD

 

 

 

MBA Mortgage Applications  

-2.7%

 

 

 

-7.4% 

 

 

 

EUR

 

 

 

German CPI (MoM) 

0.3%

 

0.3% 

 

0.7% 

 

 

 

USD

 

 

 

Core Durable Goods Orders (MoM) 

1.6%

 

1.5% 

 

-3.0% 

   

 

USD

 

 

 

Durable Goods Orders (MoM) 

2.2%

 

3.0% 

 

-3.6% 

   

 

USD

 

 

 

Crude Oil Inventories 

7.1M

 

2.5M 

 

-1.2M 

 

 

 

USD

 

 

 

Gasoline Inventories 

-3.5M

 

-1.7M 

 

-1.2M 

 

 

 

Economic Reports for March 29, 2012 Europe and Americas

08:55     EUR       German Unemployment Rate                     6.8%      6.8%    

The German unemployment rate measures the percentage of the total work force that is unemployed and actively seeking employment during the reported month.           

08:55     EUR       German Unemployment Change               -10K       0K

German Unemployment Change measures the change in the number of unemployed people during the previous month.

13:30     USD      Initial Jobless Claims                                   350K       348K      

13:30     USD      Continuing Jobless Claims                         3365K     3352K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.             

13:30     USD      GDP Price Index (QoQ)                                  0.9%      0.9%

The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product. It is the broadest inflationary indicator.                             

13:30     USD      GDP (QoQ)                                                        3.0%       3.0%    

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

17:45     USD      Fed Chairman Bernanke Speaks

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to speak. As head of the Fed, which controls short term interest rates, he has more influence over the U.S. dollar’s value than any other person. Traders closely watch his speeches as they are often used to drop hints regarding future monetary policy.                                                                       

 

Government Bond Auctions (this week)

Mar 29   00:30  Japan  Auctions 2Y JGBs

Mar 29  09:10  Italy   BTP/CCTeu auction

Mar 29  17:00  US  Usd 29.0bn 7Y Notes

Mar 30  14:30  UK  Publication of the DMO Q2 Gilt operations calendar

Mar 31  n/a  Spain  IGCP deadline for Q2 T-bill issuance programme

Apr 03  09:30  Belgium  Auctions 3 & 6M T-bills

Apr 03  09:30  UK  Conventional Gilt Auction

Apr 04  08:30  Spain  Bono auction

Apr 04  14:30  Sweden  Details T-bill auction on Apr 11

Apr 05  08:50  France  OAT auction

Apr 05  15:00  US Announces auctions 

Apr 05  15:30  Italy   Details BOT on Apr 11 & BTP/CCTeu on Apr 12

EUR/USD Forecast March 28, 2012, Technical Analysis

The EUR/USD pair has been very bullish as of late, but the Tuesday session saw a very lackluster performance. The comments out of the Federal Reserve Chairman Ben Bernanke’s mouth on Monday about keeping rates low for as long as possible really gave this pair a boost. However, there was very little follow through during the Tuesday session, and this should give the bulls a bit to worry about as there weren’t many signs of massive resistance above until the 1.35 handle. Because of this, we are a bit suspicious of the pair at this point.

The 1.35 level will be a big one to watch if the pair can find it. The failure to get to that point would be massively bearish, and as a result we would become massive sellers. The market drifting up to that level would leave very little in the way of room now, so we are willing to wait until the market reacts to the mark.  Until then, it is going to be choppy going.

The Euro will continue to have issues involving the debt markets, and even though we have seen a bailout for Greece again, the party could be winding down again as the yields for some of the periphery countries are rising still. The bonds markets are still key to this currency pair, and as such – any Forex trader needs to at least be somewhat aware of which direction they are heading in places such as Portugal, Italy, Spain, and Ireland.

With all of these variables in mind, we are more apt to sell this pair, but are hoping to see a failed attempt at 1.35 before we do. A break back below the 1.3250 level would also have us selling. On a daily close above the 1.35 level, we would be more than willing to admit that we were wrong and buy. However, the likelihood of the Euro running upward for any real length of time is unlikely. If you are looking to possibly play Dollar weakness, this isn’t the pair for you as Europe has many more issues that the United States presently. 

EUR/USD Forecast March 28, 2012, Technical Analysis
EUR/USD Forecast March 28, 2012, Technical Analysis

EUR/USD Fundamental Analysis March 28, 2012, Forecast

Analysis and Recommendations:

The EUR/USD declined slightly today to trade at 1.3338 after reaching the high of 1.3385. The USD recovered after yesterdays collapse on words from Fed Chairman Ben Bernanke. The euro climbed from the 1.3149 level to reach the mid 1.33’s during the address by the Fed Chief.

Today, the USD clawed back slightly even with poor economic results.

Home prices in the U.S. fell for the fifth month in a row in January to the lowest level since early 2003, a closely followed index showed on Tuesday. The S&P/Case-Shiller 20-city composite index fell 0.8%. 

A gauge of U.S. consumer confidence declined in March due to lower employment expectations, while views on the present situation rose to the highest level since 2008, the Conference Board reported Tuesday. The consumer-confidence gauge fell to 70.2 in March from a February reading of 71.6. A prior estimate had pegged February’s confidence level at 70.8.

In Europe today, there was little in the way of economic support.

Euro-zone finance ministers meeting at the end of this week need to boost the firepower of the region’s rescue funds to at least 1 trillion euros ($1.34 trillion) in order to restore market confidence, Angel Gurria, secretary-general of the OECD.

The European Commission has authorized the restructuring of Banco Portugues de Negócios, which has benefited from state aid since it was nationalized in November 2008.

 Spain’s government plans to increase power prices by between 5% and 7% at the beginning of April, Industry Minister Jose Manuel Soria revealed today.

 Italy on Tuesday sold 3.82 billion euros ($5.1 billion)of zero-coupon and inflation-linked bonds as borrowing costs continued to decline. Italy’s Treasury said it sold 2.82 billion euros of 24-month zero-coupon bonds at a yield of 2.35%

French consumer confidence rose sharply and unexpectedly in March to a level not seen in over a year, national statistics bureau Insee said. Households became more confident about their financial outlook and the standard of living in France.

The USD is expected to show gains in Wednesday’s session now that the markets have had time to digest the Fed Chief’s comments.

Economic Data for March 27, 2012 actual v. forecast

Mar. 27

 

JPY

 

 

 

CSPI (YoY) 

-0.6%

 

-0.4% 

 

-0.4% 

   

 

 

CHF

 

 

 

Consumption Indicator 

0.87

 

 

 

0.93 

   

 

 

EUR

 

 

 

German Import Price Index (MoM) 

1.0%

 

1.0% 

 

1.3% 

 

 

 

 

EUR

 

 

 

GfK German Consumer Climate 

5.9

 

6.2 

 

6.0 

 

 

 

 

EUR

 

 

 

French Consumer Confidence 

87

 

83 

 

82 

 

 

 

 

EUR

 

 

 

Netherlands GDP (YoY) 

-0.6%

 

-0.7% 

 

-0.7% 

 

 

 

 

HKD

 

 

 

Hong Kong Trade Balance 

-45.8B

 

-15.0B 

 

-8.9B 

 

 

 

 

EUR

 

 

 

Italian 2-Year CTZ Auction 

2.352%

 

 

 

3.013% 

 

 

 

 

GBP

 

 

 

CBI Distributive Trades Survey 

0

 

-4 

 

-2 

 

 

 

 

TRY

 

 

 

Turkish Interest Rate Decision 

5.75%

 

5.75% 

 

5.75% 

 

 

 

 

HUF

 

 

 

Hungarian Interest Rate Decision 

7.00%

 

7.00% 

 

7.00% 

 

 

 

 

USD

 

 

 

S&P/CS Home Price Indices Composite – 20 (YoY) 

-3.8%

 

-3.8% 

 

-4.1% 

   

 

 

USD

 

 

 

CB Consumer Confidence 

70.2

 

70.3 

 

71.6 

   

 

 

USD

 

 

 

Richmond Manufacturing Index 

7

 

18 

 

20 

 

 

 

Economic Events March 28, 2012 Europe and America

06:30     EUR       French GDP (QoQ)                                      0.2%       0.2%      

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health. 

 09:30    GBP      Business Investment (QoQ)                        -5.4%     -5.6%

Business Investment measures the change in the total inflation-adjusted value of capital expenditure made by companies in the private sector.                     

 09:30    GBP      Current Account                                          -8.4B       -15.2B  

The Current Account index measures the difference in value between exported and imported goods, services and interest payments during the reported month. The goods portion is the same as the monthly Trade Balance figure. Because foreigners must buy the domestic currency to pay for the nation’s exports the data can have a sizable affect on the GBP.               

 09:30    GBP      GDP (QoQ)                                                   -0.2%      -0.2%   

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health. 

T.B.D.    EUR        German CPI (MoM)                                    0.3%      0.7%

The German Consumer Price Index (CPI) measures the changes in the price of goods and services purchased by consumers.                      

13:30     USD      Core Durable Goods Orders (MoM)            1.5%      -3.0%                   

13:30     USD      Durable Goods Orders (MoM)                     3.0%      -3.7%

Core Durable Goods Orders measures the change in the total value of new orders for long lasting manufactured goods, excluding transportation items. Because aircraft orders are very volatile, the core number gives a better gauge of ordering trends. A higher reading indicates increased manufacturing activity. Durable Goods Orders measures the change in the total value of new orders for long lasting manufactured goods, including transportation items.

Government Bond Auctions (this week)

Mar 28   09:10  Italy   BOT auction

Mar 28   17:00  US  Auctions 3Y Notes

Mar 29  09:10  Italy   BTP/CCTeu auction

Mar 29  17:00  US  Auctions 7Y Notes

EUR/USD Forecast March 27, 2012, Technical Analysis

 

The EUR/USD pair broke out to the upside on Monday as the Federal Reserve Chairman suggested that the exceptionally low interest rates in the US will remain for as long as possible. Some people went so far to suggest he was hinting at Quantitative Easing 3 as well, but wither way this was a Dollar-negative remark. The Dollar lost against almost everything except the Yen, and the Euro was no different.

Looking ahead, the real fight will be at 1.35, and with the Monday session closing so close to the highs, it looks like the pair will certainly try that area above. With this in mind, we would buy the pair on pullbacks more than anything else at this point. 1.35 will have to be watched for signs of failure by the bulls though.

EUR/USD Forecast March 27, 2012, Technical Analysis
EUR/USD Forecast March 27, 2012, Technical Analysis