Eur/usd - page 26
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EURUSD: Faces Corrective Risks
Though weak and vulnerable following its two-week bear threats, as long as it holds above its rising trendline, a recovery higher is likely.
However, on continued weakness, support lies at the 1.3200 level followed by the 1.3136 level with a turn below here shifting focus to the 1.3050 level and then the 1.3000 level.
Conversely, a halt in its present weakness could force upside towards the 1.3250 level. Above here will aim at the 1.3451 level.
A break through here will set the stage for more strength towards the 1.3500 level with a break resuming its broader upside and turning attention to the 1.3550 level. Further out, resistance resides at the 1.3600 level.
All in all, EUR remains biased to the upside though correcting.
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Swiss July Retail Sales Growth Slows Sharply
Switzerland's retail sales increased at a notably slower pace in July, data released by the Federal Statistical Office showed Monday.
Retail sales, on a working-day adjusted basis, increased 0.8 percent year-on-year in July, significantly slower than the 2.3 percent gain seen in June.
Sales, excluding fuel, was higher by 0.6 percent than in July 2012. This followed a 2.2 percent increase in June.
Sale of food, beverages and tobacco advanced 0.3 percent year-on-year. Non-food sales, excluding fuel, also recorded a 0.3 percent gain.
Month-on-month, trade in the retail sector dropped a seasonally adjusted 1 percent in July, reversing June's 0.5 percent increase.
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Explosive coup for the Euro Zone
The composite (overall) index for Euroland rises in September by 11.3 to now +6.5 points. This is the second-strongest rise of the indicator since its inception in 2003. The index also manages to reach positive territory for the first time since July 2011. Both the assessment of the current situation as well as the 6-month expectations improve strongly. For Germany, the composite index jumps upward, too.
It now reaches its highest reading since April 2011 and signals a clearly strengthening economy. The other countries and regions prove stable in September. For the emerging markets regions there is a tendency for improvement, again. The index for the global aggregate rises to its highest value since March of this year.
Full report ...
Euro hits session highs vs. weaker dollar
The euro rose to session highs against the dollar on Monday, after Friday’s disappointing U.S. jobs report raised fresh doubts over a possible Federal Reserve decision to start tapering stimulus later this month.
EUR/USD hit 1.3220 during U.S. morning trade, the highest since Thursday; the pair subsequently consolidated at 1.3215, gaining 0.27%.
The pair was likely to find support at 1.3161, the session low and resistance at 1.3254, the high of August 30.
The Department of Labor said the U.S. economy added 169,000 jobs in August, fewer than the 180,000 forecast by economists and jobs growth for the two previous months was also revised lower.
The tepid data added to uncertainty over whether the Fed will start to unwind its USD85 billion-a-month asset purchase program at its upcoming policy meeting on September 17-18.
Risk appetite was boosted as improved trade data out of China over the weekend added to indications that the world’s second largest economy is recovering from a slowdown.
Data on Sunday showed that Chinese exports were 7.2% higher year-over-year in August, up from 5.1% in July, and imports were up 7%.
In the euro zone, data on Monday showed that the Sentix index of investor confidence rose to a six month high of 6.5 in September, up from minus 4.9 last month. Analysts had forecast a reading of minus 2.8.
The euro’s gains were held in check after European Central Bank President Mario Draghi reiterated late last week that bank rates will stay at current or lower levels for "an extended period," despite recent signs of economic recovery in the euro zone.
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Italian Recession Eases Less Than Initially Estimated
The Italian economy contracted at a slightly faster pace in the second quarter than initially estimated, but at a weaker rate than in the March quarter, final data from statistical office Istat showed Tuesday.
Gross domestic product (GDP) dropped a seasonally and calendar-adjusted 0.3 percent quarter-over-quarter in the June quarter, a tad faster than the 0.2 percent fall estimated earlier. In the first quarter, the economy had logged a faster contraction of 0.6 percent.
Overall output was negatively influenced by a slump in final consumption and capital formation, both of which decreased 0.3 percent each. Italy's imports were lower by 0.3 percent than in the March quarter, while exports recorded a 1.2 percent increase.
According to the revised data, GDP fell 2.1 percent from the second quarter of 2012, while the flash estimates were for a 2 percent fall. However, rate of decline was slower than 2.3 seen in the first quarter.
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German August Inflation Slows As Estimated
Germany's inflation slowed as initially estimated in August, final data released by Destatis showed Wednesday.
Consumer prices advanced 1.5 percent, after rising 1.9 percent in July and 1.8 percent in June. On a monthly basis, the consumer price index remained flat in August. The statistical office, thus confirmed the provisional results released on August 29.
The decline in inflation largely reflects a slowdown in energy prices. Excluding an annual 0.5 percent rise in energy, core inflation was 1.8 percent, it said.
The harmonized index of consumer prices climbed 1.6 percent in August from the corresponding period of last year. Month-on-month, the index was unchanged in August. Both annual and monthly figures matched preliminary estimate.
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EU's Barroso warns Europe not to derail fragile recovery
European Commission President Jose Manuel Barroso called on the EU on Wednesday to cement its fragile economic recovery even as an emergence from crisis reduces pressure to act, saying political upheaval was still the biggest risk.
Giving his annual "State of the Union" speech to the European Parliament since the euro zone's debt crisis has dramatically calmed, Barroso warned against complacency when unemployment is at a record level and urged "constancy".
"Make no mistake -- there is no way back to business as usual," he told the parliament in Strasbourg. "Some people believe that after this, everything will go back to the way it was before. They are wrong. We will not go back to the "old" normal, we have to shape a "new" normal."
The euro zone returned to growth in spring of this year after its longest ever recession brought on by the debt and banking crisis that nearly broke the currency bloc apart.
"The recovery is within sight. This should push us to keep up our efforts ... We owe it to our 26 million unemployed," he said. "With a fragile recovery, the biggest downside risk I see is political."
Pressure for action has receded across European capitals since European Central Bank President Mario Draghi promised to do whatever it takes to save the euro zone last year.
From France to Portugal, the painful reforms demanded by the Commission, the EU executive, are meeting resistance, as politicians shy away from tough issues such as dealing with insolvent banks, challenging the special interests of unions.
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Why is the Euro above $1.32?
The Euro has had a tremendous run from early July rising from 1.28 to the current level of 1.33. The currency has been boosted by better recovery prospects. European equities have recovered as the region ended its 18 month recession in the second quarter posting growth of 0.3 per cent.
There have been encouraging economic indicators with better than expected GDP and PMI figures in recent weeks –in August, Germany was 53.5 but France, Greece, Italy and Spain were below 50 (which means contraction). One area of major concern still remains – unemployment above 50% amongst 18-30 year olds in Greece, Portugal and Spain shows very little sign of improving in the near-term. The overall job rate is more than 25% in Greece and Spain. This obviously does not bode well for the young of these countries with no job prospects and plenty of time on their hands. Unemployment will start to fall but in the meantime civil unrest concerns remain.
The political situation in the Eurozone remains precarious with former Italian Prime Minister Berlusconi threatening to bring down the Italian government if the senate decide to ban him from parliament. The upcoming general elections in Germany on 22nd September remain uncertain. Greece remains on tenterhooks and Italy’s domestic economy is still very weak with public debt second only to Greece as a percentage of GDP. The peripheral countries – Greece, Portugal and Spain will remain in recession for some time with the powerhouses France and Germany only making headway.
The Euro has been remarkably strong recently with a little too much over confidence –the Euro at the current level of 1.33 seems over exuberant. There are many possible issues that could de-rail the economy over the coming weeks.
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Not sure i'd call it tremendous
especially as 3/4 of the price rise was in 2 days in early / mid July
most of the past 2 months and especially the last 3 wks have been fairly kak with the Euro
The GBP and a few others have been far better performers
can we except more of the same for the next few weeks, before someone gives the nod for it to trend upto the 1.37-1.40 area
maybe 1.40 is a bit optimistic
might have to wait until next yr for 1.40
ECB UPDATE: All Debt Aid Roads Lead to Athens
Greece remains one of the biggest concerns for the European Central Bank in the coming months as an increasing number of policy makers hint that a significant form of debt relief will be required to avoid a third formal bailout for the Eurozone's weakest link.
The issue took centre stage again this week after Governing Council member Luc Coene, who also heads the National Bank of Belgium, suggested in a radio interview Wednesday that Greece might need financial support "certainly once, perhaps twice more" when its current rescue package expires next year.
That's not to say the news is surprising: Greece's economy will likely shrink 4.2% this year, according to Troika estimates, extending a crippling recession into its sixth year. Its primary deficit was E600 million higher last month than over the same period in 2012 and revenues, even amid the peak of its holiday season, lag last year's pace.
Collectively, the government's inability on a number of fronts - privatization, revenue management, job creation, export development - will likely create a funding gap of between E5 billion and E11 billion that will need to be addressed by its lenders in the very near future.
While no senior European policy maker has been prepared to commit to either the form or the size of any future aid, many if not most have strenuously rejected the idea of a public sector haircut on Greek sovereign debt.
It's easy to see why - yet impossible to see past.
Following the March 2012 private sector debt restructuring and the buyback that followed in December, the ECB (along with national central banks) were left the proud owner of E45.3 billion in Greek government bonds. To put that in context, the ECB and the NCBs own a bigger percentage of Greece's outstanding debt stock - 15.75% - than the entire private sector combined - 12.2%.
Add the combined ownership of the EU and the European Financial Stability Facility (EFSF) and the figure grows to 56.1% of the outstanding debt stock.
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