Eur/usd - page 22
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EUR/USD gains as Syria unrest reins in dollar demand
The euro moved higher against the dollar on Tuesday as escalating tensions between the U.S. and Syria prompted investors to avoid the greenback and seek safe harbor in the yen, which brought the euro up with it.
Solid German confidence data bolstered the single currency as well.
In U.S. trading on Tuesday, EUR/USD was up 0.14% at 1.3389, up from a session low of 1.3325 and off from a high of 1.3398.
The pair was likely to find support at 1.3298, Thursday's low, and resistance at 1.3452, last Tuesday's high.
Syria's alleged use of chemical weapons in its internal conflict steered investors away from the dollar as the possibility of U.S. military strikes appeared to be on the rise
U.S. Defense Secretary Chuck Hagel said earlier the military is ready to take action against Syria if called upon by the White House.
The U.S. insists the Syrian military has used chemical weapons during its internal conflict as have the U.K. and others, a charge Damascus has denied.
On Monday, U.S. Secretary of State John Kerry said the world would hold Syria accountable for using chemical weapons.
Russia and China, meanwhile, has warned against strikes against Syria, while Iran has said a U.S. attack on its ally Syria would embroil the oil-rich region in conflict.
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Euro zone private loan contraction accelerates in July
Loans to the euro zone's private sector contracted further in July, dragging on the euro zone's nascent economic recovery and keeping up pressure on the European Central Bank to maintain its expansive monetary policy.
Loans to the private sector shrank by 1.9 percent from the same month a year ago, ECB data released on Wednesday showed, matching the lowest reading in a Reuters poll of economists, which gave a mid-range reading of -1.6 percent.
With much of the euro zone periphery still mired in recession, lacklustre demand is holding down the appetite for investment and spending, while banks restrain lending to repair their balance sheets -- a combination that threatens to condemn the bloc to an anaemic and uneven recovery.
Banks granted non-financial firms 21 billion euros less in loans in July than in the previous month, data adjusted for sales and securitisations showed, after a fall of 12 billion euros in June.
Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 2.2 percent in July, slowing from 2.4 percent in June but above the consensus forecast of 2.1 percent in a Reuters poll of analysts
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German Jobless Unexpectedly Grow in Summer Lull
German unemployment unexpectedly gained in August for the first time in three months in a sign that Europe’s biggest economy is slowing after it surged in the second quarter.
The number of people out of work increased by a seasonally adjusted 7,000 to 2.95 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted a decline by 5,000, according to the median of 25 estimates in a Bloomberg News survey. The adjusted jobless rate stayed at 6.8 percent, near a two-decade low.
Some companies are still cutting jobs as countries in the euro-region’s periphery struggle to emerge from recession. The labor market is a point of contention among German politicians as they campaign ahead of Sept. 22 elections, with Chancellor Angela Merkel opposing challenger Peer Steinbrueck’s pledge to raise taxes and introduce a flat-rate minimum wage.
“This is not a big disappointment,” said Heinrich Bayer an economist at Deutsche Postbank AG (DPB) in Bonn. “The number of unemployed over recent months has been largely stable. If the economic recovery continues, the labor market should improve again in the coming months.”
The euro was down 0.6 percent at $1.3266 at 11:21 a.m. in Frankfurt, little changed from before the data was released. The benchmark DAX (DAX) stock index was up 0.5 percent at 8,194.59. The yield on German 10-year bunds was little changed at 1.87 percent.
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Spain's recession longer than thought, but close to ending
Spain's economy looks on the verge of exiting recession, though data showed the slump will have lasted three months longer than previously thought.
Gross domestic product contracted 0.1 percent in the second quarter from a quarter earlier, the National Statistics Institute (INE) said, in line with forecasts and a preliminary reading.
But in the third and fourth quarters it should stabilize or grow by up to 0.2 percent, Economy Secretary Fernando Jimenez Latorre said following the data, enabling it to meet an official end-of-year target of a 1.3 percent contraction.
"We believe there's been an important turnaround in the economic cycle and that the bases are there to continue this new trend and this will show growth, finally ending the long and deep recession," Latorre said.
Spanish exports are recovering but domestic demand has remained weak, contributing to a slowing of consumer inflation, which separate data showed hit a four-month low of 1.5 percent in August.
The 0.1 percent drop in output was the smallest since the second quarter of 2011 when the economy started to contract.
INE revised its quarterly growth data back to the beginning of 2009. The earlier figures had pegged the beginning of the slump to the third quarter of 2011.
Spain has been in and out of recession since a decade-long property bubble burst in 2008 and, with unemployment at around 27 percent, is expected to remain in an economic slump for at least another year.
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Euro zone, IMF to press Greece for foreign agency to sell assets
Greece's international lenders will press Athens next month to transfer state-owned real estate to a holding company managed by the euro zone to spur flagging privatization efforts, officials said on Thursday.
The plan, to be put to the Greek government by the troika of lenders - the IMF, the European Central Bank and the European Commission - in September, will propose creating a Greek-owned holding company outside Greece and run by foreign experts.
The plan, first suggested two years ago, reflects growing frustration with Greece, which will probably need further aid and has made scant progress in reforming its public sector and selling assets.
Acting as a warehouse for property, it would seek to overcome Greek bureaucracy that has undermined the privatization program, agreed as part of a 240-billion-euro ($320-billion) rescue. It will also ensure that the money raised will help pay off Greece's debt.
"The main point is to maximize the value of state-owned real estate assets in Greece by making them more attractive for investors," said a spokesman for the European Stability Mechanism (ESM), stressing that the plan had not yet been discussed by euro zone finance ministers.
"The benefit of privatization is to generate resources for Greece to help overall development and pay back its own debt faster," said the spokesman for the euro zone's bailout fund.
The idea of transferring assets to a Luxembourg-based holding company was reported by Reuters in 2011, when Finland supported it. Luxembourg attracts multi-nationals seeking lower corporation tax and is home to other special purpose vehicles
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EUR/USD hits 2-week lows after U.S. data
The euro fell to two-week lows against the dollar on Thursday after official data showed that U.S. second quarter growth was revised sharply higher, indicating that the economic recovery is on track.
EUR/USD hit 1.3234 during U.S. morning trade, the lowest since August 15; the pair subsequently consolidated at 1.3242, shedding 0.72%.
The pair was likely to find support at 1.3204, the low of August 15 and resistance at 1.3300.
The Commerce Department said gross domestic product expanded at an annual rate of 2.5% in the three months to June, above expectations for growth of 2.2% and up from a preliminary estimate of 1.7%.
In a separate report, the Department of Labor said the number of people who filed for unemployment assistance fell to the lowest level since October 2007 last week.
The number of people filing for initial jobless benefits in the week ending August 23 fell by 6,000 to a seasonally adjusted 331,000, compared to forecasts for a decline of 5,000.
The upbeat data reinforced the view that the Federal Reserve could start phasing out stimulus measures as soon as next month.
The single currency was pressured lower by speculation that Greece will require a third bailout package in 2014.
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German Machinery Orders Drop In July
Germany's plant and machinery orders dropped 3 percent in July from a year ago, due to a sharp fall in foreign demand, the industry group VDMA said Thursday.
Domestic demand surged 10 percent annually, but foreign orders plunged 9 percent.
During May to July, orders declined 4 percent as both domestic and foreign demand decreased from the same period of last year.
VDMA Chief Economist Ralph Wiechers said skepticism is that the July already marks the beginning of the long-awaited turnaround.
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German Retail Sales Decline Unexpectedly
Germany's retail sales fell unexpectedly in July, the latest figures published by the Federal Statistical Office revealed Friday.
Sales dropped 1.4 percent month-on-month on a calender and seasonally adjusted basis in July against expectations for a 0.6 percent increase.
This followed a 0.8 percent fall in June. Sales have now fallen for two successive months.
In contrast, retail sales grew 2.3 percent on a yearly basis in July, faster than the expected 1.8 percent increase. This almost reversed June's 2.4 percent decline.
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Italy Unemployment Falls for Second Month as Slump Eases
Italy’s jobless rate fell for a second month in July signaling businesses may be less reluctant to hire as the country’s longest recession since the World War II eased.
Unemployment (ITMUURS) fell to 12 percent from 12.1 percent in June, the Rome-based national statistics office Istat said in a preliminary report today. The July rate was lower than the 12.2 percent median of seven estimates in a Bloomberg News survey. Still, unemployment remained above 10 percent for an 18th month.
Joblessness reached 12.2 in May, the highest since the data series began in the first quarter of 1977. Italy contracted for an eighth quarter in the three months through June. Gross domestic product fell 0.2 percent from the previous quarter, when it declined 0.6 percent.
Prime Minister Enrico Letta’s cabinet approved tax breaks for companies that offer permanent job contracts and will pass a second round of measures for youth in coming months. Both consumer and business confidence rose this month amid optimism the country will return to growth.
The unemployment rate for people between the age of 15 and 24 rose to 39.5 percent in July, Istat said today.
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Euro-Area Unemployment Rate Holds at Record 12.1% Amid Expansion
Euro-area unemployment held at a record in July, underscoring the challenges that face the 17-nation currency bloc as it tries to shake off the legacy of a debt crisis now in its fourth year.
The jobless rate in the euro zone remained at 12.1 percent, the European Union’s statistics office in Luxembourg said today. That’s in line with the median of 31 economists’ estimates in a Bloomberg News survey. Unemployment among young people increased to 24 percent.
“We have a very bleak outlook for unemployment in the euro area as a whole,” said Anatoli Annenkov, senior economist at Societe Generale SA in London. “The main headwinds remain high policy uncertainty in the euro area and still-fragmented financial markets, while we also expect several countries to need more fiscal consolidation.”
The bleak jobs report runs counter to a growing body of data that show the euro area’s economic recovery building momentum after the bloc exited a record-long recession in the second quarter. The Stoxx Europe 600 Index has gained 3.6 percent in the last two months. Economic confidence in the euro zone increased in August to the highest since August 2011, the European Commission in Brussels said today.
“Europe looks pretty attractive,” said Sheila Patel, chief executive officer of International Goldman Sachs Asset Management, commenting on European equity valuations during an interview with Bloomberg Television on Aug. 27. “If you look at profitability, if you look at business trends, there is a recovery.”
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