Eur/usd - page 13
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Eurozone Economy Stabilizes In July
The euro area economy returned to expansion territory in July, as manufacturing output posted a solid growth and the trend in services activity moved close to stabilization, survey from Markit Economics showed Monday.
The final composite output index rose to 50.5 in July, a near two-year high, from 48.7 in June. The flash reading was 50.4.
Similarly, the final services Purchasing Managers' Index climbed to 49.8 from 48.3 a month ago. The reading was also above the flash estimate of 49.6.
"The final Output Index reading of 50.5 confirms a welcome return to growth for the Eurozone economy at the start of the third quarter, raising hopes that the region can finally claw its way out of its longest-running recession," Rob Dobson, senior economist at Markit.
German recovery gained momentum, while downturns in France, Italy and Spain eased further in July.
July also saw slower falls in both new business and employment across the combined Eurozone manufacturing and services sector.
The level of incoming new business fell at the second-slowest pace during the current two-year period of decline, and at a weaker rate than signaled by the earlier flash estimate.
Ongoing strong competition continued to reduce firms' pricing power during July. In contrast, modest input cost inflation was signaled in July, although this was mainly centred on service providers.
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Australian central bank cuts rates to record low
Australia's central bank cut its main cash rate by a quarter point to a record low of 2.5 percent on Tuesday as it tries to prepare the economy for life after the mining boom.
The Australian dollar edged up on the news as the market had considered it almost certain the Reserve Bank of Australia (RBA) would cut rates at its monthly policy meeting.
"The Board has previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand," RBA Governor Glenn Stevens said in a brief statement.
"At today's meeting, and taking account of recent information on prices and activity, the Board judged that a further decline in the cash rate was appropriate."
This was the eighth move in an easing cycle that began back in November 2011 and takes rates below the depths hit during the global financial crisis.
Markets have already baked in another move to 2.25 percent by Christmas and there is no hint of a tightening priced in for at least the next year.
That outlook is reflected in government bond yields, with the cost of borrowing out for one year hitting an all-time low of 2.24 percent this week . Even two- and three-year yields are under the cash rate.
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Italy’s Industrial Output Rises in Sign of Easing Slump
Italian industrial output increased in June, indicating the country is slowly emerging from its longest slump since World War II.
Production rose 0.3 percent from May, when it increased 0.1 percent, national statistics office Istat said in Rome today. That matched economists’ forecasts, according to the median of 20 estimates in a Bloomberg News survey. Output fell 2.1 percent in June from a year earlier when adjusted for working days.
Prime Minister Enrico Letta’s government is struggling to revamp the country’s economy while maintaining the budget rigor demanded by the European Union. With banks curbing lending to companies and consumer spending hurt by joblessness, the economy has contracted since the third quarter of 2011. Istat will release gross-domestic-product data for the second quarter at 11:00 a.m. today.
The Bank of Italy predicts the economy will shrink 1.9 percent this year.
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German factory orders soar 3.8% in June; most in 8 months
German factory orders rose significantly more-than-expected in June, easing concerns over the impact of the euro zone’s debt crisis on the region’s largest economy, official data showed on Tuesday.
In a report, Deutsche Bundesbank said factory orders rose by a seasonally adjusted 3.8% in June, blowing past expectations for a gain of 1%.
Factory orders fell by 0.5% in May, whose figure was revised up from a previously reported decline of 1.3%.
Year-over-year, German factory orders climbed at an annualized rate of 4.3% in June, compared to expectations for a 0.3% gain, after falling at a rate of 1.8% in May.
Following the release of the data, the euro held on to gains against the U.S. dollar, with EUR/USD adding 0.22% to trade at 1.3287.
Meanwhile, European stock markets remained mixed. The EURO STOXX 50 rose 0.2%, France's CAC 40 inched up 0.1%, London’s FTSE 100 eased down 0.1%, while Germany's DAX tacked on 0.25%.
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Czech industry data prolongs wait for end of recession
* Industrial output falls by 5.3 percent, worst since March
* Exports fall for fifth time this year
* Data cloud hopes of economic recovery
* Political crisis makes budget outlook unclear
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ECB's Praet: Further Rate Cuts Possible If Needed
The European Central Bank stands ready to reduce interest rates further if inflation outlook warrants, ECB Executive Board Member Peter Praet said in a paper published on Tuesday.
"Against the conditions that we see prevailing over a meaningful horizon, our guidance includes an easing bias," Praet said in a paper published on the policy portal VoxEU.org, set up by the Centre for Economic Policy Research.
"This conveys the notion that we have not reached the lower bound on our key interest rates."
In July, the ECB broke away from tradition an issued a forward guidance with the bank chief Mario Draghi saying that euro area interest rates are set to remain at the current level or lower for an extended period of time. ECB rhetoric since then have not been specific on what 'extended period' meant.
After leaving interest rates unchanged this month, Draghi reiterated the guidance.
"We have not run out of ammunition," Praet said. "Further cuts in policy rates remain an option for the ECB if the outlook on price stability so warrants," he added.
Praet also noted that the forward guidance contributed to more clarity over the ECB's assessment of the outlook and it's reaction function.
"Our forward guidance has contributed to more stable money market conditions and has helped to anchor market expectations more firmly," the policymaker said.
"It also ensures that our monetary policy stance is not excessively vulnerable to shocks that are disconnected from the underlying economic and monetary conditions in the euro area."
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Euro edges higher vs. weaker dollar
The euro edged higher against the weaker dollar on Wednesday, after economic data out of the euro zone on Tuesday indicated that the currency bloc’s economy is showing signs of recovery.
EUR/USD hit 1.3316 during late Asian trade, the session high; the pair subsequently consolidated at 1.3308, edging up 0.02%.
The pair was likely to find support at 1.3245, Tuesday’s low and resistance at 1.3343, the high of July 31 and a six-week high.
Official data released Tuesday showed that German factory orders jumped 3.8% in June, compared to expectations for a gain of 1%.
A separate report showed that Italy’s economy contracted by a smaller than forecast 0.2% in the second quarter, indicating that the euro zone’s third largest economy is stabilizing.
Meanwhile, the International Monetary Fund revised up its growth forecast for Germany to 1.4% in 2014, from 1.3% previously and maintained its growth forecast for this year at 0.3% in its annual report on the country.
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Swiss Consumer Prices Remain Flat In July
Switzerland's consumer prices remained unchanged in July from a year ago, after falling 0.1 percent in June, the Federal Statistical Office said Wednesday. Economists had forecast prices to drop 0.1 percent.
On a monthly basis, consumer prices fell 0.4 percent, reversing June's 0.1 percent increase, the report showed. The latest figure matched economists' forecast.
The 0.4 percent decrease was primarily driven by the weakness in cost of clothing, automobile and aviation. Meanwhile, food and non-alcoholic beverages and housing prices increased from June.
Prices of domestic goods remained unchanged in July from the prior month, while those of imported goods dropped 1.4 percent.
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German Industrial Output Rebounds in Sign of Recovery
German industrial production rose in June, adding to signs that growth in Europe’s largest economy accelerated in the second quarter.
Output increased 2.4 percent from May, when it dropped a revised 0.8 percent, the Economy Ministry in Berlin said today. Economists forecast a gain of 0.3 percent, according to the median of 41 estimates in a Bloomberg News survey. Production climbed 2 percent from a year earlier when adjusted for working days.
Germany, which faces parliamentary elections next month, is benefiting from a nascent recovery in the 17-nation euro region, its biggest trading partner. The nation’s factory orders surged the most in eight months in June, boosted in part by contracts signed at the Paris Air Show, the ministry said yesterday. Manufacturing in the euro region expanded last month for the first time in two years, according to a survey of purchasing managers by London-based Markit Economics.
“The crisis is slowly ebbing,” said Thilo Heidrich, an economist at Deutsche Postbank AG in Bonn. “Hard economic data are following broad-based improvements in sentiment. That supports the gradual economic recovery we expect in Germany and the euro area in the remainder of the year.”
German manufacturing output increased 2.2 percent in June, with production of investment goods jumping 4.1 percent, today’s report showed. Construction rose 1.6, while energy output (GRIPIMOM) advanced 5 percent.
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Europe stocks drop on U.S. tapering concerns
European stock markets staged broad-based losses on Wednesday, tracking both U.S. and Asian stocks lower, after Federal Reserve officials said a reduction in asset purchases is likely later this year.
Investors were also waiting for the Bank of England’s quarterly inflation report and whether the central bank will reveal a framework for forward guidance.
The Stoxx Europe 600 index XX:SXXP -0.30% lost 0.5% to 301.99, after snapping a six-day winning streak on Tuesday.
Shares of TUI Travel PLC UK:TT -5.18% slid 5.1% in London after the travel agency reported an operating loss for the nine-month period to June 30.
Shares of Randgold Resources Ltd. UK:RRS -2.39% GOLD -6.36% shaved off 3.2% after the gold miner reported second-quarter profit below expectations. Other miners were also lower as most metals prices declined. Heavyweight Rio Tinto PLC UK:RIO -1.67% AU:RIO -2.10% RIO -1.65% dropped 1.8% and BHP Billiton PLC UK:BLT -1.12% BHP -0.41% AU:BHP -2.02% fell 0.8%.
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