Week in FX Europe – It Does Not Get any Easier For EUR Next Week

Enjoy this weekend and get some rest, as next week is a new month littered with central bank rate announcements, ending with the ‘granddaddy’ of economic indicators, the US non-farm payroll report. If none of the above releases ‘tickle your fancy’ investors will still have a lot of rhetoric to chew on before deciding on what asset class they wish to covet in the short term.

Draghi and company are expected to keep key interest rates on hold after the -25bp cut in May. The market risk however is that policy makers may be forced to ease monetary policy further, as early as July, if the Euro-region fails to improve or if benign inflation remains too low for too long. Analyst seem to agree if that is the situation, then another -25bp cut in the refi rate would be the most likely approach.

Other data on show will be the second and final reading of the composite purchasing managers index – the release is expected to be unrevised from the preliminary release – revealing a “mildly slower pace of contraction across the private sector.”

On more of the downbeat side of things will be the Euro-zone retail sales (-0.2%), German manufacturing orders (-1%) and production numbers (+0.0%).

Finishing the week will be the detailed Euro-zone GDP release for Q1. This report is expected to confirm that the quarter’s fall in activity was very much reflected as a “broad-based weakness.”

Now that investors have finished with last month-end portfolio rebalancing requirements perhaps this market can get back to trading technical and fundamental data again.

• Eurozone Youth Unemployment Reaches 24.4 Percent in April
• Italy Youth Unemployment Hits Record 40.5 Percent
• British Chamber of Commerce Upgrades UK Economy Forecast
• European Unemployment Hits Record High at 12.2 Percent
• BCC: UK Economic Growth Will Beat Expectations
• Europe Backs Down on Financial Trading Tax
• French President Defies EU Executive
• EU Encourages Reform and Easing Up on Austerity
• German Jobless Increase but Unemployment Rate Unchanged at 6.9%
• OECD cuts UK and Eurozone Growth Forecasts
• French Consumer Confidence Drops in May
• France Needs to Deliver Proposed Budget to Keep S&P Rating
• London Leads Strongest U.K. House Price Rise in Six Years

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