By TraderVox.com
Tradervox.com (Dublin) – The euro-dollar pair increased last week as the market speculated about the Federal Reserve Chairman’s speech at Jackson Hole. The pair closed the week above and month above 1.2587 after it challenged the resistance line at 1.2624. The market analysts expect the pair to be influenced by major events that will take place in the euro zone this week. There are about 16 major events this week that depict the reasons why the cross is likely to drop this week. Further, as the week starts, there are major tensions between the ECB and the German central bank over the decision the European Central Bank to buy bonds.
The first major event on Monday will particularly center on the issue of bond buying and the tension in the market. The Mario Draghi speech in European Parliament will be of interest as investors seek signs for the bank’s next major decisions. The ECB decision to embark on bond buying program has encountered major resistance from bundesbank, with its Chairman Jens Weidmann reported to be considering resignation as a protest to the move. The Spanish, Italian, and Final manufacturing PMI reports will also be released on Monday between seven and eight. All these reports are expected to show contraction in the manufacturing in major countries and the whole region at large.
On Tuesday, the PPI report will be the major report that will be released at 0900hrs GMT. The PPI report has been declining in the last four months. However, the market is expecting a marginal increase of 0.3 percent this time round. On Wednesday, there will be the Spanish 5-year bond auction and the Italian 10 year bond auction. Investor will be looking at the performance of these debts in the market as they gauge the market sentiments over the euro area debt crisis. Other reports on this day will be the Final Services PMI and Retail Sales which will be released at 0800 and 0900 hours respectively. The market expects these indicators to drop in the coming publication hence dampening the demand for the euro.
The Revised Euro zone GDP will be published on Thursday at 0900 hours. The first estimate had indicated that the region contracted by 0.2 percent in the second quarter, but Germany had increased by 0.3 percent. ECB rate decision will be made on this day at 1145 hrs. The same day, Rajoy will meet Merkel as they discuss measures to deal with the debt crisis. On Friday, the German and French Trade Balance reports will be published at 0600hrs GMT. Later at 1000hrs, the German Industrial production report will be published. The market expects a small increase.
With market expectation on reports from the euro zone being slightly negative, investors will likely take precautions when buying the euro. The increase safe haven demand is likely to push the dollar up against the euro.
Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management.
Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox
