EUR/USD Weekly Forecast – 14 March

Friday, Mar 11 2016

Events that marked the week:

From Eurozone, on Monday, German Factory Orders figures were released. Based on provisional data, the Federal Statistical Office (Destatis) reports that price-adjusted new orders in manufacturing had decreased in January 2016 a seasonally and working-day adjusted 0.1% on December 2015. Analysts were expecting 0.4% increase. For December 2015, revision of the preliminary outcome resulted in a decrease of 0.2% compared with November 2015, particularly due to the subsequent report of a major order (primary —0.7%).

On Tuesday, German Industrial Production figures were released. In January 2016, production in industry was up 3.3% from the previous month on a price, seasonally and working day adjusted basis according to provisional data of the Federal Statistical Office (Destatis). In December 2016, the corrected figure shows a decrease of 0.3% (primary –1.2%) from November 2015. In January 2016, production in industry excluding energy and construction was up by 3.2%. Within industry, the production of capital goods increased by 5.3% and the production of consumer goods by 3.7%.

Focus of the Thursday's session was on ECB interest rate decision and following press conference. The ECB said it was lowering its benchmark interest rate to a record-low 0.0% from 0.05%, surprising market players who were expecting no change. The central bank also cut its deposit facility rate to -0.4% from -0.3%, in line with market expectations. Meanwhile, the central bank reduced its marginal lending rate to 0.35% from 0.30%.

The ECB also said it was to increase the size of its monthly quantitative easing program to approximately €80 billion from the current €60 billion, starting in April, with investment-grade bonds added to the mix of assets eligible for purchase.The central bank also announced new series of four targeted longer-term refinancing operations to be launched in June. However, at the following Press Conference ECB President Mario Draghi pointed out that he sees no need for further rate cut in the near future and all of the introduced monetary steps goal at solid recovery of the inflation and heading towards ECB objectives.

This week markets will be looking at:

Industrial Production (Monday 11:00)

Final CPI (Thursday 11:00)

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