Euro/USD Weekly Outlook –June 4-8

The Euro/USD continued to tumble down during recent weeks but changed direction on the first couple of business days in June following the recent U.S employment report that fell short at only 69k added jobs. There are several reports that might also affect the path of Euro/USD including: U.S trade balance, Germany factory orders, a testimony by Fed Chairman and U.S. jobless claims.

 Here is a short outlook for the Euro/USD currency pair including the main news items and publications that may affect the Euro/USD for June 4th to June 8th:   

Forex Market June Update:

The Euro to USD declined by 0.66% during last week to reach by Friday 1.2435; this currency pair rallied in the last couple of business days and thus started off the month on a positive note; during June, the Euro /USD increased by 1.1%.

The chart below presents the downward trend of the Euro to USD during most of May and the recent rally in the last couple of days (UTD).

Chart Euro to us dollar Exchange Rates JUNE 4-8

Correlations among Currencies– June Update

The chart below presents the developments in the linear correlation (moving correlation) between the Euro/USD and the Aussie/U.S dollar (daily percent changes) during the last few months (up to June 4th).

The chart presents the very strong positive relation between the two currencies pairs; furthermore the correlation has slightly strengthened in the past couple of weeks. The current correlation between the two daily percent changes of these currencies is nearly 0.613 for May and June. This may suggest the effect (if at all) of the Euro/USD on the direction of the AUD/USD is still very robust.

Correlations Euro to us dollar and AUD USD  2011-2012 JUNE 4-8

Current Forex Indexes June 5th

Euro to US Dollar is traded at 1.2432 a 0.54% decrease as of 10:19*.

AUD /USD is traded at 0.9738 a 0.1% increase as of 10:20*.

(* GMT)

Euro/USD Related News for the Week

Monday – U.S Factory Orders: this report will offer some insight to the growth of the U.S economy and could affect the direction of the U.S dollar;

Tuesday – German Factory orders: this news could indicate the progress of the German Economy and consequently may affect foreign exchange and commodities traders; last time, the orders sharply rose by 2.2%;

Wednesday – German Industrial Production: this news could indicate the development of Germany’s output and consequently may affect the Euro/USD currency pair and commodities prices; last time, the industrial output sharply rose by 2.8%;

Wednesday – ECB Euro Rate Decision: In previous interest rate decision the President of ECB, Mario Draghi left the rate unchanged at 1%; The recent developments in Spain and Greece and ongoing perils the EU has forthcoming, ECB might consider remaining on the sidelines until the uncertainly will decline and keep its policy unchanged; nonetheless, if the ECB will make a change, it may affect the Euro/USD;

Thursday – French 10 Year Bond Auction: the French government will issue another bond auction; in the previous bond auction, which was held at the beginning of May, the rate reached 2.96%;

Thursday – U.S. Jobless Claims: in the previous update the jobless claims rose by 10k to 383,000; this upcoming weekly report may affect the direction of U.S dollar;

Thursday – Bernanke’s Testimony: Following the recent U.S employment report many think this will trigger the Fed to lean towards another stimulus plan. The Chairman of the Federal Reserve will testify before the Joint Economic Committee in the U.S Senate. If Bernanke will consider the recent U.S economic developments as a turn for the worst it could signal that the Fed might consider another monetary intervention;    

Friday –American Trade Balance: According to the recent American trade balance report regarding March 2012 the goods and services deficit increased during the month to $51.8 billion.

Euro to USD Weekly Outlook

The ongoing speculation around the future of Greece in Europe and the recent liquidity problems that Spanish banks are facing are likely to keep the Euro low. The ECB rate decision and press conference could affect the Euro if there will be big headlines coming out of it. Finally the U.S related news including U.S trade balance, Bernanke’s testimony and U.S jobless claims might also affect the Euro/USD especially if the reports won’t meet expectations and  if Bernanke will hint of the future step of the Fed.

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