The 2020 trading year started, and it’s time for forecasts. Every financial firm and analyst has a set of trends and predictions to follow. 2019 finished on a high note and was better than many market participants expected. Worries of a recession never materialized, the US-China trade war intensified, and Brexit uncertainty remained, but markets took the issues in stride. The big question for 2020 is if the markets simply chose to ignore the red flags.
Today’s ZEW data out of Germany and the Eurozone is expected to impact price action in the Euro. Economists anticipate the German Expectations Index to move into positive territory and the same holds for the Eurozone Economic Sentiment Index. The EURUSD retraced back down to a key support level, how will this currency pair react following the release of economic data? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Forex traders received a big cache of economic data out of the Eurozone today. It showed that inflation remains absent while the economy is under-performing, but the EURUSD managed to extend its rally after the FOMC cut interest rates yesterday. It is Mario Draghi’s last day at the ECB, will a change in leadership rally the Euro or should forex traders prepare for sell-off? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
After the Asian trading session produced several key PMI reports which disappointed without exception, forex traders will focus on PMI data out of the Eurozone where the risk of further disappointment has increased. The EURUSD has rallied over the past few trading sessions, but will the rally continue if this morning’s data comes in weaker than expected as it did in Australia and Japan? The ECB meeting will also be closely followed, what impact will it have on the EURUSD? Today’s fundamental analysis will take a look at price action in both directions.
Inflation data out of Italy and the Eurozone is expected to remain tame which may further encourage the ECB to stimulate the economy. Despite the ongoing global slowdown, the Eurozone trade surplus is anticipated to show a solid print. The EURUSD has steadily advanced from oversold conditions, how will today’s inflation data impact price action? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Final Manufacturing PMI data out of the Eurozone and key member countries will be in focus today. German data will be the most important one as it has been dragging down the Eurozone as a whole. Inflation data will also be released where economists expect no inflationary pressures, forex traders should be prepared for a potentially lower reading below 1.0% annualized. How will this impact the EURUSD which is trading at extreme oversold conditions? Today’s fundamental analysis will explore the upside potential and weigh the downside risk.
Forex traders will start the new trading week with a series of preliminary PMI data out of the Eurozone. Economists predict a general improvement out of France, Germany and the Eurozone as a whole. The EURUSD has around its current support level with a rise in negative sentiment in the US Dollar after the Fed delivered its second consecutive 25 basis point interest rate cut, but without a clear fundamental driver for the Euro to the upside. How will this morning’s PMI data impact price action?
The EURUSD started to rally after the ECB announced its stimulus package. While opinions on the success of such measures differ, for now forex traders have decided to trust the monetary policy and pushed this currency pair off of its lows. Inflationary pressures remains absent as evident in the latest data released this morning out of Germany and Spain. Have central banks ran out of ammunition and ideas? Studies have indicated that QE doesn’t have a positive impact on the economy and lead to a reduction in lending. Will the EURUSD rally extend?
The US and China confirmed that trade talks will resume in October, but will they actually yield positive results? Neither side has show willingness to cave to demands of the other and in the meantime the global economy continues to slow down. German factory order released this morning showed a much steeper contraction than economists expected. This partially negated the positive mood following yesterday’s upside surprise in Services and Composite PMI data out of the Eurozone. The EURUSD paused it bounce from yesterday and remains just below a minor resistance level.
While forex traders remain focused on developments in the US-China trade war as well as the Yuan, they will receive a heavy dose of economic data out of the Eurozone. CPI readings out of Spain and Germany will be closely watched by the ECB, but Eurozone confidence data is expected to move the Euro. Economists anticipate a further slowdown of all sub-components with the key Business Climate Indicator seen sliding further into negative territory. Will the EURUSD be able to advance off of strong support levels despite the expected negative tone in economic data?
After the Australian and Japanese PMI reports disappointed, forex traders will focus on this morning’s wave of Eurozone PMI’s. Economists predict an overall weakening across the board in another sign that the global economy is sliding into a recession. The ECB is exploring new stimulus, but did Germany hint it may be open for its own fiscal stimulus package after its economy contracted in the second-quarter? How will this impact the EURUSD which is trading at key support?
Economists anticipate that the German economy contracted in the second-quarter, on a quarterly as well as annualized basis. What impact will this have on the Eurozone GDP report which will be released today as well? Eurozone industrial production is also expected to post a sharp contraction. The EURUSD rallied off of its support area, can the rally extend as the negative data is already priced in with several economists calling for a German recession in the third-quarter?
After the ECB decided to hold interest rates, forex traders will get a healthy dose of inflation as well as GDP data out of the Eurozone and individual member countries. Germany reported a surprise drop in annualized retail sales, but the Euro remained in a holding pattern near key levels. Most forex traders are likely to await the announcement of the US Fed interest rate decision. Can the EURUSD finish today’s trading session on a high note?
All eyes will be on the ECB press conference which will follow 45 minutes after the announcement on interest rates where no change is anticipated. Will the ECB open the door for more fiscal stimulus and potentially negative interest rates in response to the bigger-than-expected slowdown in the Eurozone? The Euro is expected to come under a spike in volatility during the press conference. Prior to that, the release of German IFO data, expected to weaken further, will keep forex traders busy. Is now the time to buy the EURUSD?
Forex traders received more economic data this morning out of Asia which confirms that the economic slowdown is steeper than expected. The second-quarter GDP out of Singapore slumped by 3.4% quarterly, almost reversing the 3.8% quarterly gain reported in the first-quarter. Eurozone industrial production will now be in focus as economists anticipate a small monthly increase for May, partially reversing the decrease reported in April. Will data come in stronger than expected and extend the recovery in the EURUSD or will it follow data out of Singapore and disappoint?
Forex traders will get key inflation data out of the Eurozone today which is expected to show inflationary pressures remain absent. Some analysts question how long it will take the ECB to announce more stimulus as the Eurozone economy is cooling fast and with the US Fed poised to cut interest rates in the second-half of 2019. The Eurozone trade surplus is expected to shrink as a result of the global economic slowdown and today’s ZEW Survey is anticipated to show further deterioration in expectations. How will this impact the Euro after this currency descended into strong support levels?
After the US Fed appears to prepare the market for an interest rate cut, all eyes will be on the ECB today. While no change is expected in their current three main interest rates, forex traders have increased their expectations for more stimulus. Calls have increased as PMI data has decrease steeper and faster than anticipated and press conference which will follow 45 minutes after the interest rate announcement will be closely follow. Mario Draghi has been under pressure and hinted that the central bank will support the economy. Will he announce more QE and how will this impact the Euro?
Here is the key factor to keep in mind today for Euro trades: German GfK Consumer Confidence Survey: The German GfK Consumer Confidence Survey for March was reported at 10.8. Economists predicted a figure of 10.8. Forex traders can compare this to the German GfK Consumer Confidence Survey for February which was reported at 10.8.
Here are the key factors to keep in mind today for US Dollar trades:
Here is the key factor to keep in mind today for Euro trades: German Factory Orders: German Factory Orders for October increased by 0.3% monthly and decreased by 2.0% annualized. Economists predicted a decrease of 0.4% monthly and of 3.1% annualized. Forex traders can compare this to German Factory Orders for September which increased by 0.3% monthly and decreased by 2.2% annualized.
Here are the key factors to keep in mind today for US Dollar trades: