Euro/USD Weekly Overview for July 1-5

The Euro/USD resumed its downward trend and traded down last week. Last week’s U.S reports showed signs of progress: new home sales rose during May; new orders of manufactured durable goods increased by $8.0 billion or 3.6%; consumer confidence report showed another rise in consumer confidence index as of June. On the other hand, U.S GDP growth rate for the first quarter was revised down to 1.8%. This news may have helped strengthen the US dollar against leading currencies including the Euro. On this week’s agenda: U.S non-farm payroll report, ECB rate decision, US manufacturing PMI, German factory orders , RBA and BOE monetary policy meetings, and U.S. jobless claims. 

 Here is a short overview for the Euro/USD currency pair for July 1st to July 5th

Forex Market June/July Update:

The Euro to USD declined by 0.85% during last week the Euro/USD reached by Friday 1.3010; during June, the Euro /USD inched up by 0.08%.

Correlations among Currencies– June/July Update

The table below shows the updated linear relations (moving correlation) among the Euro/USD and other leading currencies pairs during June (daily percent changes).

EURO USD Linear Correlation Currencies Pairs For June-July 2013 July 5As seen, the strong relations among the Euro/USD and other currencies including with GBP/USD and USD/CHF suggest the changes of the Euro/USD during the week could affect these currencies pairs’ directions.

To see the developments in the gold and silver markets see here.

Euro/USD Overview for the weekly news (the full weekly market overview is herein)

Monday, July 1st

  • 15:00 – U.S. Manufacturing PMI: This report will pertain to June 2013. During May, the index dropped to 49%; this means the manufacturing is contracting;

Tuesday, July 2nd

  • 15:00 – U.S Factory Orders: This report will present the developments in U.S. factory orders of manufactured durable goods during June; in the previous report factory orders declined by 1%;

Wednesday, July 3rd

  • 13:15 – ADP estimate of U.S. non-farm payroll: ADP will come out with its estimate for the forthcoming U.S non-farm payroll change for June 2013 that will be published on Friday;
  • 13:30 – U.S. Jobless Claims Weekly Report:  in the latest report the jobless claims fell by 9k to reach 346k; this upcoming weekly update may affect the U.S dollar;

Thursday, July 4th

  • 12:45 – ECB Rate Decision: ECB will announce its cash rate for July. Following the last meeting in which the ECB left its rate at 0.50%, all eyes will be on Draghi’s next move. Some suspect he may keep ECB’s monetary policy unchanged. The idea of ECB providing a negative deposit rate is likely to remain in the back burner for the time being. I still think this scenario is less likely and that the ECB will leave for now its rate unchanged;

Friday, July 5th

  • 11:00 – German Factory Orders: This report will refer to the changes in the Germany’s factory orders for June; in the latest report the German factory orders declined by 2.3%;
  • 13:30 – U.S. Non-Farm Payroll Report: in the latest update for May 2013, the labor market rose again: the number of non-farm payroll employment rose by 175k; if in the upcoming report the employment will rise again by over 150 thousand (in additional jobs) it could pull up the USD;


Euro to USD Weekly Outlook

Following last week’s drop in Euro/USD that was partly due to the positive news of the progress of the U.S economy, this downward trend may persist if the U.S economy will keep showing signs of progress. If non-farm payroll report and manufacturing PMI will disappoint, they could pull up the Euro/USD. Moreover, if ECB won’t surprise and leave policy unchanged this could strengthen the Euro. Finally, if other central banks including RBA and BOE will leave their respective monetary policy unchanged, they could also positively affect not only their respective currencies but also the Euro.

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