EUR / USD forecast for 22-26 August, 2011

forexcrunch :

Euro/dollar had another volatile week, in which hopes switched to growing fear about the banks. The upcoming week consists of many important surveys. Here is an outlook for the upcoming events, and an updated technical analysis for EUR/USD.
Merkel and Sarkozy didn’t provide the eurobonds that many had wished for. Nevertheless, the euro enjoyed the continued bond buying of Italian and Spanish bonds by the ECB – currently sterilized - meaning no euro printing. This is quite positive for the currency. And then, growing fears about banks (some leveraged close to Lehman), together with bad figures from the US, sent stock markets lower and also weighed on the euro. This action is expected to continue.

1. Flash PMI: Tuesday – begins in France at 7:00, continues in Germany at 7:30 and ends with the all-European data at 8:00 The last purchasing managers’ indices in Europe were terrible – they all pointed to a significant slowdown. The manufacturing sector is weaker than the services one. It is too close to the critical 50 point mark. Any drop of any of the 6 indices under 50 will weigh on the euro. A score under 50 means economic contraction. 5 indices are expected to remain above 50, while the all-European manufacturing sector index is predicted to dip just below this figure.
2. German ZEW Economic Sentiment: Tuesday, 9:00. This is one of the most important surveys in Germany, and it tends to be pessimistic. In the past two months, it dipped back to negative numbers, reflecting pessimism. The survey of 350 analysts and investors is set to send the score even lower than last month’s -15.1 points and fall to -24.3 points. The all-European (yet less important) figure is expected to remain around last month’s -7 points.
3. Consumer Confidence: Tuesday, 9:00. This official from Eurostat isn’t much better. According to the latest release, consumers in the euro-zone are slightly more pessimistic, with the score falling to -11. -12 is predicted now.
4. German Ifo Business Climate: Wednesday, 8:00. Contrary to the ZEW survey, this business sentiment indicator tends to be optimistic. But also this one probably feels the slowdown in Germany. It also fell last month unexpectedly from 114.5 to 112.9 points. Another small drop is expected now in this all-important indicator – to 111.4 points.
5. Industrial New Orders: Wednesday, 9:00. After a few disappointing months, the value of orders in the manufacturing sector jumped by 3.6% last month, helping the euro. A small rise of 0.7% is expected now.
6. NBB Business Climate: Wednesday, 13:00. Although coming from a small country, this wide Belgian survey is of high importance. In the past three months it has been negative, reflecting worsening conditions. A drop from -2.5 to -3.1 points is expected now.
7. GfK German Consumer Climate: Friday, 6:00. The last survey of the week relates to consumers. While a drop was recorded also here last month, this indicator is still strong with a score of 5.4 points. A small drop to 5.2 points is likely now.
8. M3 Money Supply: Friday, 8:00. The pace of growth in money supply is another way to measure inflation, which is easing. The pace recorded last month was 2.1%. A similar number is predicted now.

* All times are GMT.