Eur/usd - page 54
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
EU argues over joint rescue plan for eurozone banks
The EU is edging towards a common mechanism for rescuing problem banks, in a drive to avoid any repetition of taxpayer-funded bailouts.
EU finance ministers finished marathon talks early on Wednesday - but they will try again next week to reach a deal on the eve of an EU summit.
Bank failures triggered the eurozone financial crises that struck the Republic of Ireland, Spain and Cyprus.
The new rescue blueprint would involve transferring powers to a new EU agency.
There are arguments over the future scope of that agency's powers - and the plan still has to be agreed with the European Parliament.
It is not yet clear how the new arrangement would affect business in the City of London, by far the biggest financial centre in the EU.
A common eurozone rescue fund would not bail out UK banks like Northern Rock, which nearly collapsed in 2007. Yet many banks in London do most of their business in the eurozone.
"We have come a long way," German Finance Minister Wolfgang Schaeuble said. The ministers agreed that in future the burden of bailing out a troubled bank should fall not on taxpayers but on the investors and creditors, he said.
Under the plan, an EU Single Resolution Mechanism (SRM) would be developed over 10 years, with a joint rescue pot of up to 55bn euros (£46bn; $76bn).
read more
ECB: Policy to remain loose as long as needed
The European Central Bank signaled Thursday that its easy-money policies will continue far into the future amid downside risks to the euro zone economy, echoing comments last week by ECB President Mario Draghi.
"The monetary policy stance will remain accommodative for as long as necessary, and will thereby continue to assist the gradual economic recovery in the euro area," the ECB said in its monthly bulletin.
Last week the ECB kept its key policy rates unchanged at record lows and reaffirmed the forward guidance it has had in place since July, that interest rates would stay at present or lower levels for an "extended" period.
The ECB expects gross domestic product in the euro zone to decline 0.4% this year and pick up to 1.1% growth next year and 1.5% in 2015. It expects annual inflation to average 1.1% in 2014 and 1.3% in 2015, which is significantly below the bank's target of just under 2% over the medium term.
Economic risks are tilted to the downside, the ECB said in its monthly bulletin, while risks to its consumer-price outlook are broadly balanced.
source
ECB's Coeure Does Not Rule Out Further Monetary Easing
The European Central Bank Executive Board member Benoit Coeure said he could not rule out further monetary easing.
In an interview with German weekly magazine "Die Zeit," he said inflation is likely to move towards 2 percent over the medium term. "We are not giving a more precise time frame, but we are certainly not talking about a decade or a generation."
The central bank has a number of options. It can cut interest rates, move deposit rate into negative territory or provide additional liquidity to the banking sector, Coeure added.
"Which of these options - if any - we will use depends on the economic developments. We could also combine these measures," he said.
source
Iceland jails former Kaupthing bank bosses
Four former bosses from the Icelandic bank Kaupthing have been sentenced to between three and five years in prison.
They are the former chief executive, the chairman of the board, one of the majority owners and the chief executive of the Luxembourg branch.
They were accused of hiding the fact that a Qatari investor bought a stake in the firm with money lent - illegally - by the bank itself.
Kaupthing collapsed in 2008 under the weight of huge debts.
For years, Kaupthing and other Icelandic banks had aggressively pursued overseas expansion plans, but when they went into administration, they brought the country's economy to its knees.
Just a few weeks before the collapse, Kaupthing announced that Sheikh Mohammed Bin Khalifa Bin Hamad al-Thani had bought a 5.1% stake during the financial crisis in 2008.
The move was seen as a confidence boost for the bank.
Legal costs
Hreidar Mar Sigurdsson, the former chief executive, received five and a half years, while Sigurdur Einarsson, former chairman of the board, was sentenced to five years in jail.
These are the heaviest sentences for financial fraud in Iceland's history.
The court gave Olafur Olafsson, one of the majority owners three years and Magnus Gudmundsson the former chief executive of the Luxembourg branch, three and a half years.
read more
Swiss producer/import prices down 0.4 pct yr/yr in Nov
Swiss producer and import prices fell 0.4 percent in November from a year ago and were 0.1 percent lower compared with the previous month, the Federal Statistics Office said on Friday.
It said producer prices fell 0.2 percent year-on-year, while import prices fell 1.0 percent.
KEY FIGURES
Nov '13 Oct '13 Nov '12 Combined index 98.1 98.2 98.5 change yr/yr -0.4 -0.3 1.2 change mth/mth -0.1 -0.4 0.0 Producer price index 98.8 98.9 99.0 change yr/yr -0.2 0.0 1.5 change mth/mth -0.1 -0.2 0.1 Import price index 96.6 96.8 97.5 change yr/yr -1.0 -1.2 0.7 change mth/mth -0.2 -0.9 -0.4 (index base 100 = May 2003)
Core infl. producer
prices pct change yr/yr -0.4 0.0 1.5
Core infl. import
prices pct change yr/yr 0.0 0.2 0.2
For more details from the Statistics Office statement in German, Reuters 3000 Xtra users can click on:
source
Euro Area Employment Remains Stable In Q3
Employment in the euro area stayed unchanged for the second successive quarter in the three months to September, data released by statistical office Eurostat revealed Friday.
At the end of the third quarter, the seasonally adjusted number of employed persons in the currency bloc was unchanged from the preceding three-month period. In the second quarter also there was no change in the employment level.
Year-on-year, employment decreased by 0.8 percent in the three months to September, after falling 1.1 percent in the June quarter.
In the European Union (EU), employment held steady in the third quarter, as it did in the second quarter. Annually, EU employment dropped 0.3 percent in the September quarter, following the second quarter's 0.6 percent fall.
Among the member states, Portugal, Ireland and Luxembourg recorded the highest sequential increases in employment. Estonia, Lithuania, Cyprus, Finland and Greece registered the largest decreases.
source
Message to the Euro: You’re Flying Too High
My colleague Vincent Cignarella, a former trader with three decades of foreign-exchange experience under his belt, likes to say the euro is like those big fat bumble bees that lazily float around your garden: it shouldn’t be able to fly, but it does.
The absurdity of the euro’s valuation has been as apparent as ever this week as it briefly broke above $1.38 and just barely missed out on setting a new two-year high versus the dollar, all while data are showing persistent improvement in the U.S. economy and stagnation in the euro zone’s. Like a tired, broken record, the euro exchange rate again highlights the impotence of a monetary structure that saddles the euro zone with short-sighted deflationary policies when central banks everywhere else have been pulling out all stops to reflate their economies.
The economic implications are significant. Exports are an important way out for the struggling economies of the euro zone’s periphery, and with the U.S. now showing decent signs of demand growth there should be a chance to boost overseas sales. But a persistently high euro inherently hinders their ability to do so.
The competitive disadvantage is even worse when compared with Japan’s currency. The euro/yen cross is now trading up at levels it hasn’t seen since the crisis of 2008. Yet Japan’s economy, historically the very epitome of stagnation, has easily outstripped growth in the euro zone this year and most likely will do the same next year.
Still, the biggest disconnect is the comparative outlook between the U.S. and Europe.
The past week’s selection of U.S. economic news – a stronger-than-expected November jobs report, a Congressional budget deal that will remove much of the fiscal drag that has been holding back the economy, and a robust retail sales report that hinted at a strong start to holiday shopping – have combined to create a notably rosier outlook. Just as important, it moves up the likelihood of wind-down in monetary accommodation by the Federal Reserve, quite possibly starting with a reduction in its bond-buying program at next week’s monetary policy meeting.
Contrast that with the euro zone. Earlier Thursday we got news that industrial production for the euro zone plunged 1.1% in October from September, against expectations for a 0.2% gain. It came alongside a report that November inflation in Italy and France was just 0.7% on the year in both cases and -0.3% and unchanged on the month, respectively. Deflation is a serious risk for the euro zone.
read more
Peripheral Europe's New Normal: 50 Applicants For One Minimum Wage Job
While it is arguable whether two instances of the same event are sufficient to indicate a pattern, when it comes to Europe under the New (feudal) Normal we are willing to make a generalizing extrapolation. Recall a week ago when we reported that hours after unleashing a campaign to hire 400 employees for its brand new megastore in the Mediterranean city Valencia, Ikea's servers in Spain promptly crashed after the company got at least 20,000 applicants (and possibly many more that would have registered had the system not experienced its Obamacare moment).
The punchline here, of course, is not the dilapidated server infrastructure of Ikea - in a world in which nobody spends any growth CapEx any more that is to be expected - but that there were 20,000 applicants for what were effectively 400 minimum wage jobs, or, said otherwise: 50 candidates for each job. Hardly a ringing endorsement of the mythical recovery that Spain's premier Rajoy fabulates in people's minds on a daily basis. Needless to say, the 2% "success rate" of applicants means it is three times harder to get a minimum wage job in this European country than to get into Harvard. Today, we find the same 2% number in action once again, as if by magic, only this time relating to minimum wage job applicants in that other European basket case - Greece.
From Keep Talking Greece
Which brings us to what is emerging as Europe's magic number, namely, 1 in 50, or what an unemployed person's chances are of getting a minimum wage job. Aka, welcome to the reekovery.
source
EUR/USD Forecast December 16-20
EUR/USD continued rising, but was unable to reach the previous highs. Is it about to change direction? Manufacturing and services PMIs, President Draghi’s speech, German ZEW Economic Sentiment and the Ifo Business Climate indicators. Here is an outlook for the market moving events and an updated technical analysis for EUR/USD.
Most recent indicators from the old continent haven’t been encouraging: industrial production unexpectedly fell in Germany, France, and in all the euro-zone. Inflation numbers from both core countries have been weak. In the US, politicians reached a budget deal that averts another government shutdown. Together with a positive employment figure that the Fed watches, chances for QE tapering seem even higher in December. With a lower high in place, can the pair reverse the gains? Let’s start:
Updates:
read more
Euro zone to share costs of bank closures gradually - proposal
The cost of closing down a euro zone bank will initially be borne almost fully by its home country, but the obligations of euro zone partners will gradually rise to be shared equitably after 10 years, under the terms of an EU proposal seen by Reuters on Saturday.
The proposal, prepared by Lithuania which holds the rotating presidency of the European Union, will be discussed at an extraordinary meeting of senior EU officials on Monday, December 16.
After a financial storm that toppled banks and dragged down states from Ireland to Spain, countries are considering a fresh blueprint outlining what to do when a bank fails, a critical second pillar of a wider reform dubbed "banking union".
Sealing a deal ahead of a meeting of an EU summit in Brussels December 19-20 will allow Germany's Chancellor Angela Merkel and her peers to trumpet an important overhaul of banking, although their readiness to share the costs of failed lenders, a central tenet of banking union, may fall short of what had been hoped.
Under the proposal, the costs of closing down a bank in the first year of operation would be fully covered by a fund set up by the home country where the bank resides.
Such funds would be set up in every euro zone country and each would be filled from fees paid in by banks in the respective countries, amounting each year to 0.1 percent of all covered deposits they hold.
read more