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Spain Q1 GDP Growth Accelerates As Estimated
Spain's economic growth accelerated in the first quarter from the prior quarter as initially estimated, final data from the statistical office INE showed Thursday.
Gross domestic product grew 0.4 percent sequentially after rising 0.2 percent in the previous quarter. The rate matched the flash estimate released on April 30. This was the third consecutive increase and the fastest in six years.
On the expenditure side, household spending rose 0.4 percent and government spending surged 4.4 percent. Meanwhile, investment fell 0.6 percent. Exports of goods and services were down 0.4 percent, while imports advanced 1.5 percent.
The statistical office revised annual GDP growth for the first quarter to 0.5 percent from 0.6 percent. The growth reversed a 0.2 percent fall in the fourth quarter.
Weak U.S. GDP, Oversold Technicals Underpin EUR/USD
Both technical and fundamental factors contributed to a relatively stronger EUR/USD on Thursday. Technically, the Euro rebounded against the U.S. Dollar because of oversold conditions following the prolonged break in price and time for the Forex pair. The market had been in a steady decline since topping on May 8.
Fundamentally, although speculators have largely priced in expanded stimulus from the European Central Bank at its next monetary policy meeting on June 5, some light short-covering underpinned the market ahead of a speech by ECB Governing Council member Carlos Costa. In addition, the dollar lost ground to the Euro due to a reported contraction in the U.S. economy. The revised government data showed the economy contracted by 1% in the first quarter versus an initial reading of 0.1% annual growth. The contraction was the first since 2011. Losses were limited, however, by stronger-than-expected weekly jobless claims data.
Although the rally triggered by speculators betting on an early interest rate hike by the Bank of England has fizzled, technically oversold conditions helped drive the GBP/USD slightly higher on Thursday. Despite the late session uptick, the Sterling is set to post its biggest monthly loss against the dollar in over a year.
The recent price action in the British Pound seems to be indicating the market is anticipating an interest rate hike by the BoE in March 2015. Because of this, there doesn’t seem to be any desire to take the GBP/USD higher over the near-term. Helping to perhaps underpin the market, but not necessarily trigger a sharply higher move was a comment by BoE Monetary Policy Committee member Martin Weale who said he sees borrowing costs rising by as much as 1 percent per year once the central bank starts to tighten.
Also helping to fuel the slight gain was the weaker-than-expected U.S. GDP data. Gains were limited, however, because most investors believed bad weather caused the loss and that the second quarter will show much improvement.
August Gold prices faltered as downside momentum created by the sharp break earlier this week continued to linger. The market couldn’t rally even after the weaker U.S. GDP data because most sellers believed the economy would improve during the second quarter. Most traders discounted the GDP number because of the harsh winter, choosing to remain bearish in anticipation of a better economy during the second quarter. This thought was in line with earlier comments from Fed policymakers who said adverse weather took its toll on the economy during the first quarter.
Despite technical factors that seem to be implying the formation of a short-term top and an impending correction, July Crude Oil prices posted a slight increase. Even the 1.7M increase in inventories couldn’t dampen the rally. According to Platts, analysts were looking for a rise of 1M barrels.
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today also a news will release for eur, GERMAN RETAIL SALES M/M, i think this news will give some boost to eur usd movements towards upside. technically in d1 chart price of eur usd is oversold and getting support in this level, so some positive news will help eurusd to boost.
German Retail Sales Fall Unexpectedly In April
Germany's retail sales fell unexpectedly in April after rising for three consecutive months, official figures revealed Friday.
Retail sales turnover declined by a real 0.9 percent from March, when it was up 0.1 percent, Destatis reported. Sales were expected to rise by 0.2 percent.
Meanwhile, on a yearly basis, retail sales grew 3.4 percent, reversing the 1.1 percent drop in March. The rate also exceeded 1.5 percent rise expected by economists.
Turnover in retail trade in the first four months of the year was 1.2 percent larger than in the corresponding period of last year.
Italy's Producer Prices Continue To Fall In April
Italy's producer prices declined for the fourteenth straight month in April, figures released by the statistical office Istat showed Friday.
The annual decline in producer prices slowed marginally to 1.5 percent from 1.6 percent in March. Prices has been falling since March 2013.
Prices in domestic market were down 1.8 percent and that in foreign market slid 0.5 percent, data showed.
On a monthly basis, overall producer prices dropped 0.3 percent in April, following a 0.2 percent fall in March.
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EUR/USD trims gains but still supported after U.S. data
The euro trimmed gains against the U.S. dollar on Friday, but remained supported as the release of mixed U.S. economic reports dampened optimism over the strength of the country's economic recovery, weighing on demand for the greenback.
EUR/USD pulled away from 1.3638, the pair's highest since May 27, to hit 1.3622 during U.S. morning trade, still up 0.15%.
The pair was likely to find support at 1.3586, Thursday's low and resistance at 1.3668, the high of May 27.
In a revised report, the University of Michigan said its consumer sentiment index ticked up to 81.9 this month, from a reading of 81.8 in April. Analysts had expected the index to rise to 82.5 in May.
Separately, data showed that the Chicago purchasing managers' index rose to a seven-month high of 65.5 in May, from 63.0 in March, confounding expectations for a fall to 61.0.
The report came after data showed that personal spending in the U.S. fell 0.1% last month, compared to expectations for a 0.2% rise, after a 1% increase in March, whose figure was revised from a previously estimated 0.9% gain.
U.S. core ersonal consumption expenditures, which exclude food and energy, rose 0.2% in April, in line with expectations, after a 0.2% increase the previous month.
In the euro zone, official data earlier showed that German retail sales fell 0.9% last month, confounding expectations for a 0.4% rise, after a 0.1% uptick in April, whose figure was revised from a previously estimated 0.7% fall.
The euro was fractionally lower against the pound, with EUR/GBP edging down 0.07% to 0.8131.
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German Retail Sales Drop For First Time In 4 Months
German retail sales fell unexpectedly in April after rising for three consecutive months, reinforcing the assessment that economic growth will slow in the second quarter.
Retail sales turnover fell by a real 0.9 percent from March, when it was up 0.1 percent, data from Destatis showed Friday. Sales were expected to rise by 0.2 percent.
Meanwhile, retail sales grew 3.4 percent on a yearly basis, rebounding from the 1.1 percent drop in March. The rate also exceeded 1.5 percent rise expected by economists.
Sales of food, beverages and tobacco surged 7.9 percent from last year, while clothing and footwear sales slipped 1 percent and household goods sales dipped 2.7 percent.
Turnover in retail trade in the first four months of the year was 1.2 percent larger than in the corresponding period of last year.
In the first quarter, Germany's economic growth rebounded solely driven by domestic demand. The quarterly growth doubled to 0.8 percent from 0.4 percent in the fourth quarter. However, growth is expected to slow in the second quarter.
Nonetheless, private survey from GfK showed that consumer confidence stayed at a 7-year high in June. Economic expectations and willingness to buy strengthened in May from the previous month despite political unrest in Ukraine.
The European Commission projects the biggest euro area economy to grow 1.8 percent this year and 2 percent in 2015.
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ECB poised for negative rates, will offer unlimited LTROs – FT
Senior ECB officials have hinted that they will also present measures to tackle the plight of the eurozone’s struggling SMEs to counter what ECB president Mario Draghi this week dubbed a “pernicious negative spiral” of low inflation and tight borrowing constraints.Jens Weidmann, Bundesbank president, is planning to support the ECB’s proposal to ease constraints on smaller businesses in more troubled parts of the currency bloc, according to a senior European central banker, but his vote for rate cuts is thought to be more finely balanced.
The ECB is expected to announce a fixed-rate offer of cheap central bank funds, often referred to as a longer-term refinancing operation, according to two people familiar with the matter. Under the LTRO, banks could borrow as much as they wanted from the central bank in the form of loans with maturities of a number of years.
This is a somewhat dovish development. Negative rates are no big surprise but still aren’t fully expected but more credit easing including unlimited LTROs for “a number of years” [more than 3?] are significant easing steps, although somewhat expected.
The article says the LTROs will be shaped around the UK funding for lending scheme.
There’s a case for selling the euro on this but it’s perilous trading so close to the weekend.
Euro Falls Most Since January With ECB Forecast to Reduce Rates
The euro fell the most since January on speculation the European Central Bank will add stimulus next week to ward off deflation and bolster economic growth.
The 18-nation currency reached a more than three-month low as ECB President Mario Draghi said earlier this month that the euro’s strength is cause for “serious concern.” The yen advanced versus the dollar for a second month as a government report showed inflation accelerated to the fastest in more than two decades in April, reducing the prospect of additional stimulus by the Bank of Japan. The ECB is forecast to cut its deposit and main refinancing rates when it meets June 5.
“It’s had something of a depressing effect globally to a degree and is consistent obviously with the euro looking a little weaker,” Alan Ruskin, the global head of Group of 10 foreign exchange at Deutsche Bank AG in New York, said of the ECB’s upcoming meeting and government-bond yields. “The issue is trying to discern what’s priced in. That’s not easily done because, when you get to unorthodox policies, it’s less obvious.”
The euro fell 1.7 percent this month to $1.3635 in New York and reached $1.3586 on May 29, the lowest level since Feb. 13. The currency dropped 2.1 percent to 138.74 yen, the most since January. The yen added 0.5 percent to 101.77 per dollar.
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ECB's Mersch Says Structural Reforms Essential To Stimulate Growth
In order to stimulate Eurozone economic growth that has diminished during the crisis, structural reforms should be initiated, Yves Mersch, a member of the executive board of the European Central Bank said Saturday.
"Indeed, most estimates find that potential growth in the euro area has diminished during the crisis," he said at meeting in Luxembourg. "This is why moving ahead with structural reform is essential."
According to him, the best way to raise real growth in the euro area is to open up product and services markets and to reallocate resources to the most productive industries.
If the current fiscal rules are to be credible, the currency bloc needs higher growth, and that means looking deeply at how authorities coordinate structural policies across Europe.
"On our current reform-resistant course, I see a distant but distinct probability that growth in the euro area begins a secular downward drift," Mersch said.
He observed that implementing structural reforms is a national responsibility, but authorities at the European level have not done enough to help gather momentum.
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