Forex - EUR/USD weekly outlook: October 29 - November 2

Published 10/28/2012, 12:06 PM
EUR/USD
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Investing.com - The euro edged higher against the U.S. dollar on Friday, following losses in the three previous sessions as stronger-than-expected U.S. third quarter growth data bolstered market sentiment.

EUR/USD 1.2884 on Friday, the pair’s lowest since October 11; the pair subsequently consolidated at 1.2940 by close of trade, down 0.62% on the week.

The pair is likely to find support at 1.2824, the low of October 11 and resistance at 1.3023, Thursdays high.

The Commerce Department reported that the U.S. economy grew by a better-than-forecast 2% in the three months to September, on the back of stronger consumer spending, after expanding by 1.3% in the preceding quarter. Economists had predicted growth of 1.9%.

Separately, the final reading of the University of Michigan’s consumer confidence index ticked down to 82.6 for October, from the initial reading of 83.1, which was the highest since September 2007.

Earlier in the week, the Federal Reserve said the U.S. economy was improving moderately, but said job growth has been slow and the unemployment rate remains elevated.

In its rate statement on Wednesday, the central bank also said it planned to keep its benchmark short-term rate close to zero through mid-2015.

The single currency remained under pressure amid ongoing uncertainty over when Spain will request a bailout and doubts over whether Greece will meet austerity targets.

Worries over the fiscal and economic outlook for Spain mounted Friday after official data showed that the country’s unemployment rate jumped to a record 25.02% in the third quarter.

The euro found some support after European Union Commissioner for Economic and Monetary Affairs Olli Rehn said the first round of disbursements to troubled Spanish banks will occur on schedule in November.

In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls data after the unemployment rate unexpectedly fell to 7.8% in September from 8.1% the previous month.

In addition, investors will be awaiting any indication that Spain is growing closer to requesting a bailout from its euro zone partners.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, October 29

In the euro zone, Germany is to produce preliminary data on consumer price inflation, which accounts for the majority of overall inflation. Elsewhere, Italy is to hold an auction of 10-year government bonds.

Later Monday, the U.S. is to release government data on personal income, personal spending and core consumer inflation.

Tuesday, October 30

In the euro zone, Spain is to release preliminary data on third quarter gross domestic product; the foremost indicator of economic activity and the leading gauge of the economy's health.

The U.S. is to release data on consumer confidence, a leading indicator of economic health, as well as industry data on house price inflation, an important indicator of demand in the housing sector.

Wednesday, October 31

The euro zone is to publish preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as data on the unemployment rate in the bloc. In addition, Germany is to produce government data on employment change, a leading indicator of economic health.

In the U.S., payroll processing firm ADP is to release a report on nonfarm payrolls, a leading indicator of private sector job creation. The U.S. is also to publish official data on manufacturing activity in Chicago, as well as data on employment costs and crude oil stockpiles.

Thursday, November 1

In the euro zone, markets in France and Italy are to remain closed for national holidays.

The U.S. is to release private sector data on nonfarm payrolls, an important indicator of job creation. The U.S. is also to publish its weekly government report on initial jobless claims, as well as official data on nonfarm productivity and labor costs, important inflationary indicators.

In addition, the Institute of Supply Management is to publish data on U.S. manufacturing activity.

Friday, November 2

In the euro zone, Spain and Italy are to release data on manufacturing activity, a leading indicator of economic health. In addition, France is to hold and auction of 10-year government bonds.

The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, a leading indicator of job creation in the economy, as well as data on the unemployment rate.

The U.S. is also to publish official data on average earnings and factory orders.


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