EUR/USD Weekly Forecast - 7 May

Saturday, May 05 2018

EUR/USD extends its slump, falling to new 2018 lows in a perfect storm. A speech from ECB President Draghi stands out.

The adverse data continued pouring in the euro-zone.GDP growth slowed down to 0.4% q/q in Q1, as expected but inflation already provided new disappointments with a deceleration to 1.2% y/y on the headline a fall to 0.7% on the core. Purchasing managers’ indices and retail sales added to the misery. In the US, the Fed left the interest rate unchanged and sent a somewhat more cautious message, hinting that it could allow for higher inflation. The Non-Farm Payrolls reported disappointed on both job growth, 164K, and also on a slowdown in the wage growth: 2.6% against 2.7%. EUR/USD managed to recover on each US disappointment but recovered shortly thereafter showing the weakness of the pair.

Major events in the coming week:

German Factory Orders: Monday, 6:00. The euro-zone’s locomotive saw a modest increase in factory orders back in February: 0.3%. A slightly higher growth rate is forecast: 0.5% for March.
Retail PMI: Monday, 8:10.
Sentix Investor Confidence: Monday, 8:30. This 2800-strong survey reported 19.6 points in April, reflecting a lower optimism among investors and analysts. Another slide would be worrying.
German Industrial Production: Tuesday, 6:00. Contrary to factory orders, industrial output slipped in February by 1.6%. A rebound worth 0.8% is on the cards for March.
German Trade Balance: Tuesday, 6:00. Germany has a chronic trade surplus, but it dipped to 19.2, below wider expectations. A similar figure is predicted now: 19.9 billion.
French Industrial Production: Wednesday, 6:45. The second-largest economy in the euro-zone saw a big jump in industrial output in February: 1.2%. A more modest pace is on the cards for March: 0.5%.
ECB Economic Bulletin: Thursday, 8:00. The European Central Bank publishes the information its members viewed at the most recent rate decision. A downbeat report could weigh on the euro.
Mario Draghi speaks Friday, 13:15. The President of the European Central Bank will be speaking in Florence, Italy. Any reference to the economy and inflation will move markets.