EUR/USD Fundamental Analysis February 23, 2012, Forecast

Economic Events: (GMT)

09:00     EUR       German Ifo Business Climate Index                                        108.8                     108.3       

09:00     EUR       German Current Assessment                                                   116.5                     116.3    

 09:00    EUR       German Business Expectations                                                102.0                     100.9

The German Ifo Business Climate Index rates the current German business climate and measures expectations for the next six months. It is a composite index based on a survey of manufacturers, builders, wholesalers and retailers. This report includes Current Assessment and Business Expectations. The index is compiled by the Institute for Economic Research.               

09:30     GBP       BBA Mortgage Approvals                                                            37.3K                     36.2K       

The British Bankers' Association (BBA) Mortgage Approvals measures the number of new mortgages approved by BBA-backed banks during the previous month. It includes more than half of the total U.K. mortgage market. It provides information about the buyers in the housing market in the U.K.

11:00     GBP       CBI Industrial Trends Orders                                                      -13                          -16

The Confederation of British Industry (CBI) Industrial Trends Orders measures the economic expectations of the manufacturing executives in the U.K. It is a leading indicator of business conditions. A level above zero indicates order volume is expected to increase; a level below zero indicates expectations are for lower volumes. The reading is compiled from a survey of about 550 manufacturers. 

 13:30    USD      Initial Jobless Claims                                    354K                      348K                     

13:30     USD      Continuing Jobless Claims                          3460K                    3426K     

Initial Jobless Claims and Continuing Jobless Claims measure the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.               

Analysis and Recommendations:

The EUR/USD is trading at 1.3248 after hitting a high earlier in the day of 1.3267. The day has been mostly negative for the eurozone, with several below forecast indicators and a downgrade of Greece's credit rating. The euro still maintained strength to hold in the mid 1.32 level. It is expected to take a fall soon.

Fitch dropped Greece's credit rating to C from CCC on Wednesday, and warned that a default is 'highly likely in the near term'.

Eurozone Nov Industrial orders revised to -1.1% from -1.3%, y/y revised to -2.5% from -2.7% A much stronger set of numbers including the revisions.

Eurozone Feb flash composite PMI 49.7 from 50.4 - expected 50.6

German February flash manufacturing PMI 50.1

French February flash manufacturing PMI 50.2

In Italy final January HICP fell -1.8% m/m and rose 3.4% y/y, down from +3.7% y/y in December and the weakest y/y gain since August 2011, ISTAT said. -The main domestic index (NIC) rose 0.3% m/m, +3.2% y/y, down from +3.3% y/y in December and the strongest y/y gain since last summer.

 Sales of U.S. existing homes rose 4.3% in January and inventories fell to nearly seven-year lows, as lower prices, unusually warm weather and an improving economy all lifted demand.

The National Association of Realtors said Wednesday that January sales were at a seasonally adjusted annual rate of 4.57 million, compared to economist forecast of 4.7 million. Sales rose in all four major regions, including an 8.8% pop in the West.

Eurozone Nov Industrial orders revised to -1.1% from -1.3%, y/y revised to -2.5% from -2.7% A much stronger set of numbers including the revisions.

Eurozone Feb Flash composite PMI 49.7 from 50.4 - expected 50.6

German February flash manufacturing PMI 50.1

French February flash manufacturing PMI 50.2

In Italy final January HICP fell -1.8% m/m and rose 3.4% y/y, down from +3.7% y/y in December and the weakest y/y gain since August 2011, ISTAT said. -The main domestic index (NIC) rose 0.3% m/m, +3.2% y/y, down from +3.3% y/y in December and the strongest y/y gain since last summer.

Wednesday February 22, 2012 Economic Reports     actual v. forecast

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

EUR/USD Pivot Points (Time Frame: 1 Day)