Eur/usd - page 139
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Italy falls back into recession
Italy's economy has fallen back into recession, latest official figures show, after contracting for two quarters in a row.
GDP, the value of all the country's goods and services, shrank 0.2% in the second quarter of the year.
The surprisingly weak number follows a 0.1% contraction in the first quarter.
Economists consider two quarters of shrinking GDP means a country is in recession.
At the end of last year the country appeared to be emerging from recession, growing fractionally in the last three months.
But since then the numbers have been getting worse.
Speaking before the release of the latest figures, Hetal Mehta, European economist with Legal & General Investment Management, told the BBC: "Italy has a huge pile of government debt and they need growth to bring that debt stock down, so having such weak growth figures is a major setback."
But the Bank of Italy said last month that GDP had contracted by 9% since the global financial crisis began in 2007.
Separate figures showed industrial output increased by 0.9% from May to June, the biggest increase in five months.
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French Trade Balance -5.4B vs. -4.8B forecast
The French trade balance fell unexpectedly last month, industry data showed on Thursday.
In a report, Ministry of Finance said that French Trade Balance fell to -5.4B, from -5.1B in the preceding month whose figure was revised down from -4.9B.
Analysts had expected French Trade Balance to rise to -4.8B last month.
Yesterday investors were quick to dump the euro, driving the currency to new lows at 1.33326, but then erased all of its losses to trade back up closing at 1.33832 and form a hammer pattern and a bullish divergence.
Today we have the release of ECB interest rate decision and monetary policy. The interest rate is expected to stay unchanged and ECB may loosen even more the monetary policy.
ECB holds rates at record-low 0.15%; Draghi comments eyed
The European Central Bank held its benchmark interest rate at a record low in August, amid ongoing concerns over growth prospects and deflationary pressures in the region, it announced on Thursday.
The ECB said it was maintaining its benchmark interest rate at a record-low 0.15%, in line with market expectations. The central bank also held its marginal lending at 0.40% and left its deposit facility rate unchanged at -0.10%.
ECB president Mario Draghi was to comment on the decision at a press conference later in the day.
Market participants will scrutinize Draghi’s comments for clues in regards to the central bank's next course of action in dealing with an ongoing sovereign debt crisis.
Following the announcement, the euro held on to losses against the U.S. dollar, with EUR/USD shedding 0.04% to trade at 1.3376.
all i know is the draghi is going to do something today about the eur have been weak over last 3 weeks must do something today wait for the news
Draghi in ‘wait-and-see’ mode; economic risks to downside
Draghi in ‘wait-and-see’ mode; economic risks to downside
ECB In Wait-And-Watch As Rates Left Unchanged
The European Central Bank on Thursday left its interest rates unchanged for a second straight month in August as it waits to judge the effect of the stimulus measures announced two months back.
The Governing Council, led by President Mario Draghi, held the refinancing rate at a record low 0.15 percent, following its policy meeting in Frankfurt. In June, the bank had cut the rate.
The bank maintained the deposit rate at -0.10 percent. In June, the bank slashed the rate from zero to negative, which in effect would charge Eurozone banks for parking excess funds at the ECB, which was a first for a leading central bank.
The marginal lending rate was retained at 0.40 percent, following the 35 basis point reduction in June.
The bank had kept rates unchanged for six consecutive months before June, even as the prospect of deflation threatened to derail the fragile economic recovery in the currency-bloc.
Draghi also announced EUR 400 billion targeted longer-term refinancing operations, or TLTROs, in June that will mature in September 2018.
Under the plan, financial institutions can borrow money from the ECB, totaling 7 percent of their total loans to the non-financial private sector.
Draghi is set hold his customary post-decision press conference at 8.30 am ET, wherein he is expected to explain the rationale behind today's decision.
"President Draghi is likely to acknowledge the recent weakness of economic indicators and perhaps reiterate his recent assurance that full-blown quantitative easing lies squarely within the ECB's mandate," Capital Economics Senior European Economist Jennifer McKeown said.
"But he will probably point to the continued stability of market-based measures of long-term inflation expectations to support the Bank's view that QE is not yet warranted. He might also claim that recent falls in the euro exchange rate and in bond yields reduce the need for further policy support."
Capital Economics continues to expect a full programme of asset purchases, but not until the turn of the year.
Eurozone inflation was the weakest in four-and-a-half years in July, at 0.4 percent, remaining below the ECB's aim of keeping the figure 'below, but close to 2 percent' for the eighteenth consecutive month.
Latest inflation was the lowest after prices started rising since November 2009. In June, the ECB staff forecast inflation for this year at 0.7 percent and 1.1 percent for next year.
Meanwhile, the unemployment rate in the 18-nation bloc declined unexpectedly in June to the lowest since September 2012 from a record high level maintained since the end of last year, as labor market conditions improved notably in Germany and Spain.
source
EURUSD Analysis leads to a medium and long-term bearish setups.
But the bullish momentum divergence (RSI) has continued to grow on the 4h charts with the latest drop.
This drop also failed to clear a new daily low under yesterday’s low of 1.3332.
There is an increased risk of a bullish correction here though we will not be getting long quite yet as the dominant trend (bearish) is still valid.
Just a break above 1.3400 (mixed-trend), and above 1.3450 could turn the short-term trend to bullish.
price made a hammer yesterday and i think another one will be formed by the end of today
Russian food embargo a big blow for EU producers: industry
Russia's embargo against food from the European Union will affect 10 percent of the EU's food exports and may cause a crisis of glut in Europe, industry experts said on Thursday.
The figures, at face value, mean that Russia's announcement on Thursday of a "full embargo" against EU food will deprive Russians of fresh goods in particular.
But it will also have a significant effect on many exporters who will now have to find new outlets and may lose markets to rivals in emerging countries.
European Union ministers are planning a meeting next week to "evaluate" the potential impact of the sanctions, said France's Agriculture Minister Stephane Le Foll.
The EU's ambassador to Russia, Vygaudas Usackas, said the bloc is also considering appealing to the World Trade Organization over the import ban.
Russia imports 35 percent of the food it consumes, and imports 10 percent of its needs worth 12 billion euros ($16 billion) a year from the European Union, official EU statistics show.
Among the 18 EU countries, Germany and the Netherlands are among its biggest suppliers.
Outside the EU, Brazil is a big supplier. Ukraine was also until it become embroiled in the conflict with Russia over eastern Ukraine, which lies behind the tit-for-tat trade sanctions.
Russia accounted for less than 1.0 percent of the US's agricultural exports last year at $1.2 billion, according to US Department of Agriculture data.
The embargo will likely have the biggest impact on US poultry exports to Russia, which were worth $310 million in 2013, nuts, worth $172 million, as well as shipments of soyabeans and live animals, mainly cattle.
- Vegetables in front line -
"Russia exports grains but is a big importer of fruit and vegetables and of processed food such as meat and milk products," the head of the main French farmers' union FNSEA, Xavier Beulin, said.
Experts say the EU product which Russians will miss most is vegetables, since Russia imports EU vegetables worth 770 million euros per year. Russian imports of EU wines and spirits amount to about 1.5 billion euros annually.
In the vegetable sector, Russia imports big quantities of EU apples, tomatoes and peaches, but the European market faces plentiful supply of these perishable goods owing to good production this year.
"Russian is shutting off imports but the products which no longer go for export are going to be offloaded in Europe and create a crisis situation," Beulin said.
The president of the French fruit producers' federation, Luc Barbier, said: "In 2012, Spain exported about 100,000 tonnes of fruit to Ukraine and Russia, and this is now going to arrive on the EU market."
Italy, Spain and France are already competing in a price war over nectarines and prices have collapsed, and the same "catastrophe" looks like engulfing the market for apples, he said.
French producers sent fruit worth nearly 26 million euros to Russia in 2012, he said.
"But this year, Poland, which exported a lot to Russia, is expecting a big crop, which will now arrive on the EU's internal market," Barbier said.
The world association of apple and pear producers, Wapa, said that Poland was by far the biggest producer of apples in the EU, with output expected to total 3.5 million tonnes this year, followed by Italy with 2.3 million tonnes and France with 1.5 million tonnes.
The biggest EU supplier of beef to Russia is Brazil by a long way, followed by other countries in Latin America and by North America, although US meat exports are now also under Russian embargo.
Sales of EU beef had already fallen sharply since 2013 to less than the equivalent of 50,000 tonnes of carcasses from 100,000 tonnes in 2011, the French Institute of beef producers said. Ostensibly, that is because of health reasons, said Guy Hermouet, at the French national beef federation.
Belgium, the Netherlands and Germany would be hit hardest in this sector, he said.
- Norwegian fish caught in uncertainty -
Denmark and the Netherlands would suffer most in the dairy sector.
European exports of pigmeat to Russia were already totally blocked by a Russian ban on January 29 owing to a risk of swine fever, on the basis of cases found in wild boar.
Barbier said that European producers now also ran a risk that competitors in Asia or Latin America would fill the gap and take away market share in Russia which EU industries would have difficulty winning back.
In Norway, which is not a member of the European Union, shares in companies raising salmon fell by eight to 11 percent on Thursday due to uncertainty about the outlook. Russia is one of the biggest markets in the world for salmon and the biggest for Norwegian fish products.
European grain prices also fell, but traders said this reflected mainly concern about the outlook for exports of wheat and corn from Ukraine, a leading exporter, set against concern about the effect of heavy rain on wheatfields in northwest France.
At Capital Economics in London, chief emerging markets economist Neil Shearing, commented that the impact of the Russian action was uncertain. Although some countries, notably Lithuania, could be hit hard, the overall impact on EU exports would be small.
"It seems likely that the biggest loser will be Russia itself," he said.