Euro/USD Weekly Overview for June 17-21

The Euro/USD slightly rose last week and traded above the 1.3 mark. This rally might change direction this week, however, as several reports and decisions will unfold that could drag the Euro down below the 1.3 mark. These items include: FOMC meeting, U.S core CPI, Philly fed survey, EU current account, U.S housing starts, Germany’s manufacturing PMI, Euro Group meetings, and U.S. jobless claims.

 Here is a short overview for the Euro/USD currency pair for June 17-21  

Forex Market June Update:

The Euro to USD rallied by 0.98% during last week to reach by Friday 1.3347; during June, the Euro /USD increased by 2.68%.

Correlations among Currencies– June Update

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

EURO USD Linear Correlation Currencies Pairs For May-June 2013 June 17

As seen, the strong correlations among the Euro/USD and other currencies mainly GBP/USD and USD/CHF suggest the movement 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)

Tuesday, June 18th

  • 10:00 – German ZEW economic sentiment: In April the ZEW indicator for Germany edged up to 36.4 points; if Germany’s economic sentiment will rally, the Euro will plausibly strengthen against other currencies such as the USD;
  • 13:30 – U.S. Housing Starts: in the previous monthly report, the adjusted annual rate reached 853,000 in April 2013, which was 16.5% below March’s rate;
  • 13:30 – U.S Core Consumer Price Index: According to the U.S Bureau of Labor statistics, during April, the CPI declined by 0.4% (M-o-M); the core CPI inched up by 0.1%; the core index rose over the past twelve months by 1.7%.

Wednesday, June 19th

  • 19:00 – FOMC Meeting, Economic Forecast and Press Conference: In the previous of meeting the FOMC left its policy unchanged. Moreover, Bernanke’s testimony didn’t offer any big headlines, even though he did suggest that tapering the current asset purchase program isn’t off the table and could happen in the near future. Considering the inflation is still very low, the unemployment is still well above the Fed’s goal of 6.5% and economic growth isn’t stable, I suspect the Fed won’t change its policy this time. Over the weekend the IMF criticized the U.S for expanding its budget to promote growth. This is another consideration that might keep the Fed’s current QE3 policy unchanged. The Fed’s forecast, however, could change, which, in turn, could influence traders and investors. If The Fed will implement any changes to its policy or change its forecast, these changes could stir up the markets; how will the Fed’s upcoming decision affect gold and silver prices see here.

Thursday, June 20th

  • 09:00 – Flash German Manufacturing PMI: In the previous monthly report regarding May 2013, the German PMI rose to 49 i.e. the manufacturing conditions are shrinking at a slower pace. This report serves as an indicator to the economic developments of the Euro Area’s leading economies’ manufacturing conditions;
  • 13:30 – U.S. Jobless Claims Weekly Report:  in the previous report the jobless claims declined by 12k to reach 334k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;
  • All Day – Euro-Group Summits: In this summit, the EU ministers of finance and Euro-Group President will convene in Brussels. They are expected to talk about the recent economic and monetary developments in Europe;

Euro to USD Weekly Outlook

The FOMC meeting could stir up the forex market including the Euro/USD. If the Fed will taper its current asset purchase program or even hint to that effect, we are likely to see a sharp drop in the EURO/USD as the US dollar will strongly appreciate. Otherwise, don’t expect much movement form the Euro/USD currency pair as it will continue to slowly rally.

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