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EUR/USD Weekly Forecast – 24 July – 28 July

Friday, Jul 21 2017
EUR/USD Weekly Forecast – 24 July – 28 July

Events that marked the week:

From Eurozone, on Monday, Final CPI figures were released. Euro area annual inflation was 1.3% in June 2017, down from 1.4% in May. In June 2016 the rate was 0.1%. European Union annual inflation was 1.4% in June 2017, down from 1.6% in May. A year earlier the rate was 0.1%. These figures come from Eurostat, the statistical office of the European Union. The largest upward impacts to the euro area annual inflation came from accommodation services (+0.08 percentage points), package holidays (+0.06 pp) and tobacco (+0.04 pp), while telecommunication (-0.10 pp), social protection (-0.04 pp) and bread & cereals (-0.03 pp) had the biggest downward impacts.

Tuesday's session brought ZEW Economic Sentiment figures for Germany and Eurozone. The ZEW Indicator of Economic Sentiment for Germany fell slightly by 1.1 points in July 2017 and now stands at 17.5 points. The indicator thus still remains below the long-term average of 23.8 points. The assessment of the current economic situation in Germany decreased by 1.6 points in July. The corresponding indicator, however, still remains at a fairly high level of 86.4 points. “Our overall assessment of the economic development in Germany remains unchanged compared to the previous month. The outlook for the German economic growth in the coming six months continues to be positive. This is now also reflected in the survey results for the eurozone,” comments ZEW President Professor Achim Wambach, PhD.

 

The indicator reflecting the financial market experts’ expectations regarding the economic development in the eurozone decreased by 2.1 points in July, bringing the expectation indicator to a current level of 35.6 points. By contrast, the indicator for the current economic situation in the eurozone climbed significantly. It currently stands at 28.7 points, 8.2 points higher than in June. Since November 2016, the indicator for the economic situation in the eurozone has been steadily increasing, now reaching its highest level since January 2008. With that said, the economic outlook for the eurozone has experienced a clear overall improvement.

 

Focus of the Thursday's session was on ECB interest rate decision and the following Press Conference. Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.

 

Regarding non-standard monetary policy measures, the Governing Council confirms that the net asset purchases, at the current monthly pace of €60 billion, are intended to run until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.

 

This week markets will be looking at:

 

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

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

German Ifo Business Climate (Tuesday 10:00)

Spanish Unemployment Rate (Thursday 8:00)

M3 Money Supply (Thursday 10:00)

German Prelim CPI (Friday)

Spanish Flash CPI (Friday 9:00)

Spanish Flash GDP (Friday 9:00)

 

More in this category: « GBP/USD Weekly Forecast – 24 July – 28 July AUD/USD Weekly Forecast – 31 July – 04 August »

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