The Euro USD rallied during last week. Its rally coincided with the recovery of other leading currencies against the US dollar including Japanese yen and Aussie dollar. During last week it was reported that U.S existing home sales declined by 1.2% during June; jobless claims increased by 7k to reach 343k; U.S core durable goods spiked by 4.2% during June; new home sales spiked by 8.3% in June. This mixed signal didn’t stop the Euro to keep rising against the USD. Will the Euro US dollar keep rising this week? On this week’s agenda: U.S pending home sales, FOMC meeting, ECB rate decision, and U.S employment report. Here is a short overview for the Euro/USD currency pair for July 29th to August 2nd.
Euro/USD August Update:
The Euro to USD rallied again by 1.03% during the previous week; the Euro/USD reached by Friday 1.3279; during the month, the Euro /USD slightly increased by 1.94%.
Correlations among Currencies – August Update
The table below shows the updated linear correlation (moving correlation) among the Euro/USD and other leading currencies pairs during July (daily percent shifts).
As seen in the table herein, the strong correlations among the Euro/USD and other currencies including with USD/CHF and GBP/USD suggest the developments of the Euro/USD could affect these currencies pairs’ paths.
See here a short outlook of gold and silver prices.
Euro/USD Weekly News Forecast (the full weekly market overview is herein)
Monday, July 29th
- 15:00 – U.S. Pending Home Sales: This report presents the changes in pending home sales in the U.S. for June; in the latest report, the pending home sales index sharply increased by 6.7%; if the housing data will show ongoing rise in sales it may pull back the Euro U.S dollar;
Tuesday, July 30th
- 15:00 – U.S Consumer Confidence: Based on the previous update, for May, the consumer confidence index increased to 81.4 (month-over-month). The current expectations are that the June index may further rally;
Wednesday, July 31st
- 07:00 – German Retail Sales: In May, retail sales bounced back by 0.8% – higher than many had expected; if this report will show another rise in sales then it might further pull up the Euro US dollar;
- 19:00 – FOMC Meeting and Press Conference: In the latest meeting the FOMC left its policy unchanged. But in the press conference that followed, Bernanke hinted that the Fed may scale back on QE3 in the coming months. Later on, however, Bernanke took a step back in his testimony and suggested the FOMC will keep its expanding Monterey policy. This left its unclear when the Fed will scale down its asset purchase program. Perhaps in this upcoming meeting the FOMC member will make it clearer;
Thursday, August 1st
- 12:45 – ECB Rate Decision: ECB will announce its cash rate for August. Following the last meeting in which the ECB kept its rate at 0.50%, Draghi’s decision could stir up the Euro market. If ECB will cut its cash rate, or lower further its deposit rate, the Eur USD is likely to fall;
Friday, August 2nd
- 13:30 – U.S. Non-Farm Payroll Report: in the previous employment report, the number of non-farm payroll employment rose by 195k; U.S unemployment rate remained at 7.6%; if in the upcoming report the employment will grow again by over 150 thousand (in additional jobs), this may pull back the Eur USD;
Euro USD Weekly Forecast
The Euro/USD rallied again during last week despite some positive U.S reports that showed signs of recovery for the U.S economy. The upcoming ECB rate decision and press conference that will follow could keep the Euro rising if Mario Draghi will keep his positive tone regarding the future progress of the EU economy. In the U.S the upcoming FOMC meeting could stir up the forex market again and if Bernanke will hint that the Fed may taper QE3 this year, this news could strengthen the USD. The upcoming U.S reports including pending home sales, manufacturing PMI, GDP for the second quarter and non-farm payroll report could affect the U.S dollar. If the data will show growth, they could pull back up the US dollar, which means the Euro USD pair could change direction and decline. The upcoming EU reports including the unemployment rate and German retail sales might not show progress for the EU economy and thus could also pressure down the Euro USD. I think we might see a pull back for the Eur/USD during this week.
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