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EURUSD rose during the course of yesterday session, clearing the above the 10-day moving average. By doing so, it appears that the market will more than likely try to run to the 1.5555 level, where it should find enough selling pressure. All eyes will now turn to Monday as a talk about the Greek bailout continues.
Euro zone GDP 0.3% vs. 0.2% forecast
Gross domestic product in the euro zone rose more-than-expected in the last quarter, preliminary official data showed on Friday.
In a report, Eurostat said that GDP rose to a seasonally adjusted 0.3%, from 0.2% in the preceding quarter.
Analysts had expected GDP to rise 0.2% in the last quarter.
thank you for the news.
EU Preview: Cautious Love Fest, Europe Ready for Greek Compromise
Greece and its international partners have given impression that they will make every effort to clinch a deal at Monday's crucial Eurogroup meeting in Brussels. ECB and BoE minutes, Germany's ZEW data and flash PMIs will also attract the attention of markets watchers in the week ahead.
The Eurogroup - euro-area finance ministers, central bankers and European Commission (EC) officials are scheduled to meet on Monday February 16 in Brussels to discuss Greece’s opposition to the terms of its current rescue package and its request for a new deal.
Monday's meeting follows the previous February 9 Eurogroup talks and the summit of EU leaders on Thursday, with Greece's new Prime Minister Alexis Tsipras attending and presenting his case for a new arrangement between Greece and its international creditors.
Crushing debt burden
According to many experts, it may be reasonable to restructure or at least reschedule some of Greece's massive debt, according to some experts, as the country has to repay around €2.3 billion to the IMF and to roll over about €5.7 billion of Treasury Bills till the end of March, with more massive payments to follow throughout the year.
The European Central Bank's (ECB) €6.7 billion in bonds come to maturity before September, while repayments to the IMF amount to €9.8 billion for the whole year, with the largest tranches coming in March, June and September. The ECB's two bonds of €3.3 billion each, are maturing in July and August.
Apart from that, the Greek government has to roll over about €5.7 billion of Treasury Bills by the end of March, along with a €2.3 billion repayment to the IMF. Government bonds amount to €14.5 billion in total for 2015 and are mostly held by domestic banks. Only a small part of that debt had been acquired in previous months by foreign entities.
Optimism prevails
Greek officials as well as euro zone leaders sounded optimistic on Thursday and Friday last week, trying to show some goodwill toward a compromise deal before considering Greece's new proposals and giving hope that some agreement could be worked out next week.
"We leave today having made some significant steps," Greek PM Tsipras told reporters at a late night press conference following Thursday's summit. "The technical teams will work over the next few days to prepare the ground for Monday's Eurogroup."
Eurogroup Chair Jeroen Dijsselbloem tweeted we "agreed today to ask the institutions to engage with the Greek authorities to start work on a technical assessment of the common ground between the current program and the Greek government’s plans."
It would pave the way for crucial talks between euro zone finance ministers next Monday, he said after the EU summit. "I am optimistic that we will have an outcome on the technical process because I think that is a matter of simply comparing different measures and content of the program [and Syriza's program]," Dijsselbloem told reporters as he left the summit yesterday. However, he cautioned: "I am very cautious on the political side. It is going to be very difficult. It is going to take time. Don't get your hopes up yet," he added.
German Chancellor Angela Merkel pronounced "I would only say that Europe always aims to find a compromise, and that is the success of Europe... Germany is ready for that. However, it must also be said that Europe's credibility naturally depends on us respecting rules and being reliable with each other," she said.
"I am optimistic because I hope that we find such a deal, it is possible," Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs said.
Finland’s Prime Minister Alexander Stubb sounded less optimistic, saying "I would not be so sure that we are not going to find a solution on this. The euro group of financial ministers are meeting and I think we are all expecting Greece to give a proposal by Monday next week. We will see what they come up with," he said. "I am sure a solution will be found at the end of the day."
Greece's government spokesman Gavriil Sakellaridis said: "We will do whatever we can so that a deal is found on Monday."
BoE and ECB Minutes
The Bank of England (BoE) publishes the minutes of February's Monetary Policy Committee (MPC) meeting on Wednesday, at which the key interest rate was kept at a record-low 0.5%.
"The minutes of the February meeting of the Bank of England’s Monetary Policy Committee (out Wednesday) are highly likely to show that there was once again a 9-0 vote in favour of keeping interest rates at 0.50%. There was undoubtedly a 9-0 vote in favour of keeping the stock of Quantitative Easing unchanged at £375 billion. A major development at the January meeting saw MPC members Martin Weale and Ian McCafferty drop their call for an immediate raising of interest rates, having consistently voted for a 25-basis-point increase from 0.50% to 0.75% from August through to December, " Howard Archer, chief UK & European economist with IHS Global Insight, wrote in his note to clients on Friday.
"Given that the Bank of England has just released its Quarterly Inflation Report for February, much of the potential thunder of the minutes of the February MPC meeting has been stolen," he added.
The ECB publishes an account of its January 22 meeting, at which it decided to start quantitative easing. It will the first time the bank will have published a record of its monetary-policy meetings in order to increase transparency in its decision-making processes.
"The accounts will contain an overview of financial market, economic and monetary developments. This will be followed by a summary of the discussion, in an unattributed form, on the economic and monetary analysis and on the monetary policy stance. The accounts will offer a fair and balanced reflection of policy deliberations," the ECB said in a press release accompanying the decision.
"The aim is to provide the rationale behind monetary policy decisions and enable members of the public to improve their understanding of the Governing Council’s assessment of the economy and its policy responses in the light of evolving conditions."
Flash PMIs
Flash PMIs for France, Germany and the EU for both the manufacturing and services sectors for February will be released on Friday, hinting at the direction of the economy in the euro zone.
The flash manufacturing PMI for Germany is expected to register an uptick to 51.4 from 50.9 recorded in January, while the index for the services sector is also projected to rise to 54.2 from the 54.0 recorded in the previous month.
France's flash manufacturing PMI is seen ticking up to 49.6 in February from 49.2 measured in the month before. The services sector is expected to come in at 49.9, a higher figure than the 49.4 recorded in January.
The forecast for the EU flash manufacturing PMI shows an upward move to 51.4 for February from 51.0 recorded a month ago. The EU's services sector is also expected to make a positive uptick to 53.0 from 52.7 reported the month before.
Macroeconomic data
On Tuesday, the Zentrum fur Europaische Wirtschaftsforschung (ZEW) will release its Economic Sentiment Index for the next six months for Germany, as well as the Current Situation Index, reflecting institutional investors' opinions of whether the current situation is improved, worsened, or unchanged, and the difference between positive and negative responses.
Economic sentiment is seen heading up to 56.0 in February from 48.4 measured in January, while the Current Situation Index is expected to rise to 28.8 from 22.4 in the previous month.
The UK will release inflation data also on Tuesday. CPI in January is seen as easing to - 0.8% compared to stagnation reported a month ago, with the annual CPI is predicted to decline to 0.4% from December's 0.5%.
UK labor data will be released on Wednesday, with unemployment in the country expected to decline again to 5.7% in December from 5.8% reported a month ago.
French January inflation, reported on Thursday, is seen as easing to -0.9% compared to 0.1% reported a month ago, while the annual CPI is predicted to decline to -0.3% from December's 0.1%.
UK retail sales figures for January are due on Friday, with a 0.2% decline from 0.4% growth on a monthly basis, and a significant 6.1% rise when compared to 4.3% growth in December, year-on-year.
This week's macroeconomic picture will be completed by information on the euro zone's financial health, with current account numbers released on Thursday and Italy's trade results on Tuesday.
Other events of the week
Voters in Hamburg cast ballots on Sunday in German Chancellor Angela Merkel’s first electoral test of 2015. The Social Democrats, Merkel’s junior coalition partners at the national level, will retain power in the port city, the opinion polls suggest.
Swiss National Bank President Thomas Jordan will speak on Tuesday at the Universite libre de Bruxelles in Brussels on "Switzerland at the heart of Europe."
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EUR/USD Forecast Feb. 16-20
EUR/USD traded in a narrow range for long periods, a feat unseen for a long time, but eventually made a nice move higher. Greece remains in the limelight, but we also have the first ECB meeting minutes, PMIs and other events to move the common currency. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Greece was left, front and center. Tough rhetoric was heard from both sides around the Eurogroup meeting. Greece seems to be willing to compromise on some aspects but still wants a change in debt repayment. Germany seems willing only to change the word “troika” but offers a tough stance. This might change after elections in Hamburg. Data continued beating expectations, with strong German growth standing out. Is the weaker euro already bearing fruit? In the US, the strength that followed the NFP faded when both retail sales and consumer confidence disappointed.
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Grexit Speculation Makes No Sense: Draghi
Speaking for Spanish weekly magazine ABC in an interview published on Sunday, European Central Bank (ECB) head Mario Draghi said that the euro zone was "irreversible." However, he wouldn't to comment on the concept of Greece exiting the 19-member single currency area.
"Please understand that I prefer not to comment at all on this issue. Whatever statement from me could be used politically. To speculate on a potential exit from the monetary union doesn't make any sense," Draghi said.
Greece's Finance Minister Yanis Varoufakis and his euro zone counterparts are scheduled to meet on Monday to continue complex and difficult negotiations over the plan by the new Greek government to end the austerity program imposed by the country's international creditors, and a renegotiation of Athens' massive debt.
QE and Greece
Following the Monday meeting, Draghi and ECB Governing Council will meet on Wednesday to decide about the details of January 22 quantitative easing (QE) program. ECB makers must complete the legal act and decide on key elements of the scheme such as how assets will be bought and how to calculate self-imposed limits.
Although Greece won’t initially take part in the QE program due to the ECB’s existing holdings of the nation’s debt from an earlier bond-purchases, Draghi said he expects it to do later this year.
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EURUSD fell slightly during the Friday session creating a pin bar, as the market continues to grind away below the 1.1460 level. Fridays pin bar can offer a nice selling opportunity on the close below the 10-day moving average, so may expect a downward move to a daily support at 1.1236.
Euro zone Dec trade surplus higher than expected
The euro zone had a bigger than expected unadjusted trade surplus in December, as exports surged eight percent year-on-year and imports edged just one percent higher, data showed.
The European Union's statistics office Eurostat said the trade surplus of the 18 countries sharing the euro last year was 24.3 billion euros, almost double the 13.6 billion in December 2013 and well above market expectations of 20.5 billion.
For the whole of 2014, exports rose 2 percent over 2013 while imports were flat, bringing the overall trade surplus for the whole year to 194.8 billion euros from 152.3 billion in 2013.
More detailed data for December was not yet available, but numbers for the January-November period showed that much of the improvement in trade balance was due to a sharp fall in the deficit in the energy trade, thanks to plummeting oil prices.
Eurostat said that in the first 11 months of last year, the energy trade deficit fell to 256.7 billion euros from 292.5 billion in the same period of 2013.
Adjusted for seasonal swings, the euro zone's trade surplus was only minimally smaller at 23.3 billion euros in December, as exports fell 1.1 percent month-on-month and exports declined 2.4 percent.
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Euro Underpinned by Greek Developments
How long will it take until we see movement again on the EUR/USD.