Euro/USD Forecast for February 17-21

The US dollar depreciated against leading currencies such as Euro, Japanese yen and Aussie dollar during last week. In the upcoming week several reports, decisions and events will come to fruition including: Minutes of FOMC meeting, U.S PPI, U.S existing home sales, minutes of last RBA meeting, ECOFIN Summit, U.S housing starts, GB climate count, Germany and France’s manufacturing PMI reports, Canada’s retail sales, U.S CPI, and G20 Summit.  Here is an economic outlook for the week of February 17th to February 21st.

(All times GMT):

Monday, February 17th

All Day – Euro-Group Summits: The summit will be held in Brussels; the EU ministers of finance and Euro-Group President may pertain to the latest developments in Europe;

Tuesday, February 18th

10:00 – German ZEW economic sentiment: The next report will refer to the ZEW indicator of economic sentiment for Germany for January. In December, the ZEW indicator for Germany slipped to 61.7 points; if Germany’s economic sentiment continues to fall, the Euro could plausibly weaken against other currencies including the US dollar;

14:00 – U.S. TIC Long Term Purchases: The Treasury International Capital monthly update will show the developments the purchases and sales of US long term treasuries for December 2013. In the recent report regarding November 2013, the net foreign sales of U.S Treasuries longer-term notes reached a deficit of $29.3 billion;

All Day – ECOFIN Summit: The EU ministers of finance will meet and talk about the recent economic developments in EU;

Wednesday, February 19th

13:30 – U.S. Housing Starts: The U.S Census Bureau will publish its U.S housing starts monthly update for January 2014; this report was historically correlated with gold price – as housing starts rise, gold tends to decline the next day (even when controlling to the U.S dollar effect); in the past report, housing starts fell by 9.8% during December to reach over 999,000 houses;

13:30 – U.S. Building Permits: In the previous update, during December, building permits dropped by 3% (m-o-m) as the adjusted annual rate of building permits reached 986,000. If building permits pick up, it may indicate that the U.S housing market is reheating (the recent U.S building permits update);

13:30 – U.S. Producer Price Index: This report shows the inflation rate from the producers’ side; it will refer to January 2014. In the last report regarding December, this index for finished goods rose by 0.4% compared with December’s level; the core PPI increased by 0.3%; this news might affect the USD;

19:00 – Minutes of the last FOMC Meeting: Back in January, the FOMC meeting decided to further taper its asset purchase program by another $10 billion to $65 billion a month. This news seems to have had short term adverse effect on the prices of gold and silver. The US dollar also rallied against major currencies. But since then, the USD dollar fell and the prices of precious metals rallied. The upcoming minutes might shed some light on this decision, which could stir up the markets again;

Thursday, February 20th

All Day – G20 Summit

09:00 – Flash German, French and Euro Zone Manufacturing PMI: In the recent monthly report regarding January 2014, Germany’s PMI increased again to 56.3 i.e. the manufacturing conditions are growing at a faster pace. France’s PMI also rose to 48.8. This report serves estimates to the developments in the Euro Area’s manufacturing conditions; this news, in turn, may affect the Euro/USD currency pair and consequently commodities prices;

13:30 – U.S Core Consumer Price Index: This monthly report pertain to the main changes in the core consumer price index for January 2014. Based on the U.S Bureau of Labor statistics, during December, the CPI rose by 0.3%; the core CPI inched up again by 0.1%; this report could affect the USD and may also affect the FOMC’s monetary policy;

15:00 – Philly Fed Manufacturing Index: This monthly survey estimates the growth of the US manufacturing sectors. In the last survey regarding February, the growth rate slightly rose from +7 in December to +9.4 in January. If the index further declines, it may adversely affect not only U.S Dollar but also U.S equity markets and commodities (the recent Philly Fed review);

13:30 – U.S. Jobless Claims Weekly Report:  This weekly report will refer to the changes in the initial jobless claims for the week ending on February 14th; in the recent report the jobless claims rose by 8k to reach 339k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;

Friday, February 21st

All Day – G20 Summit

10:00 – EU Economic Forecast: The European Commission will release its quarterly outlook report for the EU economy;

15:00 – U.S. Existing Home Sales: This report will present the changes in U.S. existing home sales during January 2014; in the last report regarding December 2013 the number of homes sold slipped to a seasonally adjusted annual rate of 4.87 million houses; if this trend persists, it might adversely affect the U.S dollar;

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