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EUR/USD Weekly Forecast - 19 January - 23 January

Friday, Jan 16 2015

Events that marked the week:

 

From Eurozone, on Wednesday, Industrial Production figures were released. In November 2014 compared with October 2014, seasonally adjusted industrial production rose by 0.2%, beating expectations on no change. The increase of 0.2% in industrial production in the euro area in November 2014, compared with October 2014, is due to production of durable consumer goods rising by 1.9%, non-durable consumer goods by 0.5% and intermediate goods by 0.3%, while capital goods fell by 0.2% and energy by 0.9%.

However the focus of the session was on The European Court of Justice announcement of a preliminary, non-binding ruling regarding the constitutionality of the ECB's Outright Monetary Transactions policy (OMT). According to the EU court adviser OMT programme is in line with EU law so long as certain conditions are met.

 

What this means is that OMT is legitimate so long as there is no direct involvement in financial assistance programme that applies to state in question. Furthermore, ECB must outline its reasons for adopting unconventional measures such as OMT.

 

Euro sharply fell by over 200 points on Thursday morning as the Swiss National Bank (SNB) discontinued the minimum exchange rate of CHF 1.20 per euro. At the same time, it is lowering the interest rate on sight deposit account balances that exceed a given exemption threshold by 0.5 percentage points, to −0.75%. Interest rate was cut at an unscheduled emergency meeting. It is moving the target range for the three-month Libor further into negative territory, to between –1.25% and −0.25%, from the current range of between −0.75% and 0.25%. 

 

This week markets will be looking at:

 

German ZEW Economic Sentiment/ ZEW Economic Sentiment (Tuesday 11:00)

Spanish Unemployment Rate (Thursday 09:00)

Minimum Bid Rate/ECB Press Conference (Thursday 14:30)

French Flash Manufacturing PMI/French Flash Services PMI (Friday 9:00)

German Flash Manufacturing PMI/German Flash Services PMI (Friday 9:30)

Flash Manufacturing PMI/Flash Services PMI (Friday 10:00)

More in this category: « GBP/USD Weekly Forecast - 19 January - 23 January AUD/USD Weekly Forecast - 26 January - 30 January »

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