However, a slight wave of optimism spread in the market after the European Central Bank intervened and bought Italian and Spanish bonds, which sent yields lower and supported bonds to gain value, which in result supported the euro to recover some of the losses incurred during the week on Friday.
GreeceandItalywere able to end the political instability this week, as both nations assigned new Prime Ministers to save the nations from a deeper crisis, whereGreeceassigned the former European Central Bank vice president, Lucas Papademos as the new Premier, whileItalyhanded the former European Commissioner, Mario Monti the premiership.
Greece and Italy accelerated the implementation of the austerity measures and will pass them through the parliament and now all eyes will be focused during this week on the European Union leaders’ meeting in Brussels, where both new premiers are to join them in a discussion about the economic and financial situation in the euro-area region, while during the meeting both premiers will present their plans to cut spending and meet targets.
On Sunday, general elections will take place in Spain, as the Spanish Prime Minister’s period came to an end and now eyes will be focused on the new elected government, with expectations that the People’s Party will take the lead and the party leader will become the next Premier, which could add positivity to the market as he pledged to lower Spain’s deficit to 4.4% of the total GDP next year.
During the week, investors will have their eyes concentrated on bonds auctions in Italy, France and Spain, where all markets are tracking yields’ behavior and movements in Europe, as last week yields climbed to all-time record since founding the one currency union, which sent the euro south, where rising yields could prevent European nations from accessing the capital market as they rise to unsustainable levels.
Eyes will also be concentrated on the United States, where by November 23 (Wednesday) lawmakers should find common grounds and provide markets with a final plan to cut the U.S. huge budget deficit over the coming ten years, where in case lawmakers didn’t agree, a previously set plan, which is expected to cut the deficit by 1.2 trillion dollar over the period, will be activated as they reached the deadline without providing any comprehensive measures.
Turning to critical fundamentals expected this week,GermanyandU.S.will release the gross domestic product figures, which are expected to have major impact on the pair, while the euro zone andGermanywill provide data regarding the manufacturing and services sectors’ performance in November, and finally theUnited Stateswill release the income report.
Volatility and heavy fluctuations are highly possible this week, especially with heavy fundamentals load in addition to the political and financial decisions from Europe and the U.S, noting that the United Stateswill be in the Thanks Giving Holiday on Thursday, while on Friday there will be an early closing in the New Yorksession
Other news from the euro area and the U.S. economy to affect the pair this week:
Monday November 21:
The euro zone will start this week at 09:00 GMT with the current account figures for September, where the previous non-seasonally adjusted deficit was 6.3 billion euros, while the previous seasonally adjusted deficit was 5.0 billion euros.
TheUnited Stateswill join the session at 15:00 GMT with the existing home sales figures for October, with expectations that the existing homes sales could have retreated to 4.80 million houses from 4.91 millions. In addition, the monthly existing home sales index could show that sales dropped by 2.2% from the previous drop of 3.0%.
Tuesday November 22:
The euro zone will start the session at 15:00 GMT with the consumer confidence indicator for November in the advanced reading, where the indicator stood at -19.9 in the previous month.
At 13:30 GMT the United States will join the session with the GDP figures for the third quarter in a second reading, where the quarterly annualized GDP index could have lingered at 2.5%, while the personal consumption index could have stood at 2.4%, in the time GDP price index is expected unchanged at 2.5%. Finally, the quarterly core PCE is projected steady at 2.1%.
At 19:00 GMT the Federal Reserve will release the Minutes of FOMC last meeting.
Wednesday November 23:
Germany will start the session at 08:30 GMT with the PMI manufacturing and service for November in an advanced reading, where the PMI manufacturing is expected to decline further to 48.4 from 49.1, while the PMI services could have slipped to 50.0 from 50.6.
At 09:00 GMT the euro zone will join the session with the PMI Composite for November in an advanced reading, as the PMI composite is expected to contract further reaching 46.2 from 46.5, while the PMI manufacturing could have contracted further to 46.5 from 47.1, in the time the PMI service is expected lower at 46.0 from 46.4.
At 10:00 GMT the euro zone will provide the industrial new orders figures for September, where the non-seasonally adjusted annual index could have expanded by 8.0% from 6.2%, while the seasonally adjusted monthly index could have dropped by 2.6% from 1.9%.
At 13:30 GMT the United States will join the session with the durable goods figures for October, where durable goods orders could have fallen 1.0% from the previous drop of 0.8%, while durable goods excluding transportation index is expected unchanged, noting that the previous expansion was 1.7%.
TheUnited Stateswill also release the income report at 13:30 GMT, with expectations that the personal income index could have improved 0.3% from 0.1%, while the personal spending index could have expanded by 0.3% from 0.6%. Furthermore, the annual PCE Deflator could have expanded by 2.7% from 2.9%, while the monthly PCE core could have improved 0.1% from the previous zero expansion, in the time the annual PCE core is expected higher at 1.7% from 1.6%.
In addition, the United Stateswill provide markets with the initial jobless claims figure for the 19th of November, where the number of claims could have eased to 385 thousands from 388 thousand.
At 14:55 GMT the Untied States will end the session withUniversityofMichiganconfidence for November in a final reading, where the confidence could have improved slightly to 64.5 from 64.2.
Thursday November 24:
Germanywill start the session at 06:00 GMT with the GDP figures for the third quarter in a final reading, where the seasonally adjusted quarterly GDP is expected unchanged at 0.5%, while the working-day adjusted GDP index is expected at 2.6%. In addition, the domestic demand index for the third quarter is expected unchanged at 0.4%, while exports are expected to expand by 1.7% from 2.3%.
At 09:00 GMT Germany will release the IFO survey for November, where the business climate indicator could have retreated to 105.2 from 106.4, while the current assessment indicator could have declined to 115.2 from 116.7, in the time expectations indicator could ease to 96.0 from 97.0.
The United States (Thanks GivingHoliday)
Friday November 25:
There are no fundamentals affecting the EUR/USD pair.
The United States (Early closing)
The EURUSD moved up into the 8 and 21 day EMA resistance layer today but closed the day well off its highs, forming a bearish pin bar in the process. Next week, we see the potential for this market to move lower if the pin bar low from today breaks. The next main support comes in around 1.3150.
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