EUR/USD Weekly Forecast – 27 June

Saturday, Jun 25 2016

Events that marked the week:

From Eurozone, on Tuesday, ZEW Economic Sentiment figures were released. The ZEW Indicator of Economic Sentiment for Germany has increased in June 2016. The index has improved by 12.8 points compared to the previous month, now standing at 19.2 points (long-term average: 24.4 points). "The improvement of economic sentiment indicates that the financial market experts have confidence in the resilience of the German economy. However, general economic conditions remain challenging. Apart from the weak global economic dynamics, it is mainly the EU referendum in Great Britain which causes uncertainty," says Professor Achim Wambach, President of ZEW.

Financial market experts’ sentiment concerning the economic development of the Eurozone has improved. ZEW’s Indicator of Economic Sentiment for the Eurozone has increased by 3.4 points to a reading of 20.2 points. Falling by 0.8 points in June 2016, the indicator for the current situation in the euro area has dropped to a value of minus 10.0 points.

Tuesday's session brought German and French Manufacturing and Services PMI data. Germany’s manufacturing PMI rose unexpectedly last month, preliminary data showed on Thursday. In a report, Markit Economics said that German manufacturing PMI rose to a seasonally adjusted 54.4, from 52.1 in the preceding month. Analysts had expected German manufacturing PMI to fall to 52.0 last month. German service sector activity fell more-than-expected last month, official data showed on Thursday. In a report, Markit Economics said that German Services PMI fell to 53.2, from 55.2 in the preceding month. Analysts had expected German Services PMI to fall to 55.0 last month.

France’s manufacturing PMI fell unexpectedly last month, preliminary data showed on Thursday. In a separate report, Markit Economics said that French manufacturing PMI fell to a seasonally adjusted 47.9, from 48.4 in the preceding month. Analysts had expected French manufacturing PMI to rise to 48.8 last month. French service sector activity fell unexpectedly last month, official data showed on Thursday. French Services PMI fell to a seasonally adjusted 49.9, from 51.6 in the preceding month. Analysts had expected French Services PMI to rise to 51.7 last month.

Friday's session was marked by German Business Climate figures. German business sentiment unexpectedly improved in June as companies shrugged off the risk of Britons voting to leave the European Union. The Munich-based Ifo institute’s business climate index rose to 108.7 from a revised 107.8 in May. That’s the highest level since December. The median estimate in a Bloomberg survey of economists was for a decline to 107.4. The U.K. voted to quit the 28-nation bloc, with final results published Friday showing 52 percent of the electorate was in favor of an exit.

This week markets will be looking at:

M3 Money Supply (Monday 10:00)

German Prelim CPI (Wednesday)

Spanish Flash CPI (Wednesday 9:00)

German Unemployment Change (Thursday 9:55)

CPI Flash Estimate (Thursday 11:00)

Spanish Manufacturing PMI (Friday 9:15)

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