The EUR/USD continued the course of fluctuations and volatility in the market on Wednesday as investors remained focused on the upcoming FOMC decision and Bernanke's speech.
Europe exited the market and the movement was still bound by expectations over the change in the Feds monetary policy. It was taken for granted that the Feds will leave the benchmark rate steady between zero and 0.25% as they are waiting for clues from Bernanke later in the day for the coming moves with the June expiry of the quantitative easing in June and whether the Feds will reiterate their stance on rates to remain low for an “extended period”.
The final revelation from the Feds and Bernanke are to be key components in defining the trend for the EUR/USD for Thursday and the coming period.
As for the Euro Area, more data are on queue for release and also from the US for us to keep an eye on. After the rise in new industrial orders from the euro area for the fifth month in February the sentiment is still solid over the ongoing recover in the nation.
Therefore, the German data are to be of key focus for Thursday with jobs figures at 07:55 GMT. Unemployment is expected to have continued to trend lower dropping by 37,000 following 55,000 and pressuring the unemployment rate lower to 7.0% from 7.1% which is surely bullish for the euro.
As for the US economy, and after we assess what the Feds provide, we will turn the focus on Thursday to the first quarter growth figures.
At 12:30 GMT the advance GDP estimate for the first three months of the year is expected to show the recovery loosing some momentum from the previous quarter with 2.0% expansion from 3.1%.
Personal consumption is expected to have halved to 2.0% from the previous quarter 4.0% and Core PCE at 1.4% rising from 0.4% which is a gauge of inflation checked by the Feds and still in a secure area.
The weekly jobless claims are expected to drop to 395,000 from 403,000. While at 14:00 GMT the pending home sales are expected with 1.5% rise slowing from 2.1%.
Heavy volatility is expected for the EUR/USD pair on Thursday as investors react on the Feds comments from the US late tonight to Asia tomorrow morning and into the European session. Nonetheless, the odds are still slim for a strong shift in the monetary policy outlook and likely the euro will sustain its gains backed by a hawkish ECB.
Originally posted here
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