Eur/usd - page 249
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The USD strengthen after better-than-expected US initial jobless claims and continuing jobless claims putting pressure on the EURUSD that fell fast and hard on yesterday session. If the 1.0622 support do not hold it may continue the downside momentum to the next support level at 1.0462.
Euro's Global Reserve Status Tarnished: IMF Data
Fresh data from the International Monetary Fund (IMF) show central banks worldwide reduced their euro holdings by the most on record last year, anticipating losses caused by massive quantitative easing carried out by the European Central Bank (ECB).
The euro now represents just 22% of global reserves, a significant decline from 28% before the euro zone financial crisis five years ago. Meanwhile, dollar and yen holdings have both expanded.
According to the IMF's data, of the $6.1 trillion of reserves for which central banks specify a currency, the proportion of euros fell in every quarter of 2014.
“As a reserve currency, the euro is falling apart,” Daniel Fermon, a strategist at Societe Generale SA in Paris, told Bloomberg. “As long as you have full quantitative easing, there’s no need to invest. The problem for the moment is we don’t see a floor for the currency. Money’s flowing out.”
National Australia Bank estimated that reserve managers sold at least $100 billion worth of euros in Q4 2014.
Large banks like Citigroup and Goldman Sachs expect the euro to fall below parity with the dollar in 2015, from a 12-year low of $1.0458 last month.
EUR/USD eases off 3-week trough but remains under pressure
The euro trimmed losses against the U.S. dollar on Friday, easing off a three-week trough but still remained under pressure as growing hopes for a U.S. rate hike in the coming months continued to support the greenback.
EUR/USD eased off 1.0569, the pair's lowest since March 17, to hit 1.0612 during U.S. morning trade, still down 0.44%.
The pair was likely to find support at 1.0549, the low of March 17 and resistance at 1.0788, Thursday's high.
The dollar remained supported after New York Federal Reserve President William Dudley said Wednesday that the timing of a rate hike depends on economic data and added that a rate hike in June could still be possible if the labor market recovery remained strong.
Meanwhile, Wednesday’s minutes of the Fed’s March meeting showed that several officials believe the economic outlook is likely to warrant an interest rate hike in June.
The greenback was also boosted after the U.S. Department of Labor reported on Thursday that the number of individuals filing for initial jobless benefits last week rose less-than-expected.
Earlier Friday, data showed that French industrial production was flat in February, confounding expectations for a 0.1% downtick. January's figure was revised to a 0.3% rise from a previously estimated increase of 0.4%.
A separate report showed that Spain's industrial production increased at an annualized rate of 0.6% in February after a 0.1% gain in January, whose figure was revised from a previously estimated 0.4% rise.
The euro was steady against the pound, with EUR/GBP at 0.7246.
In the U.K., the Office for National Statistics said that manufacturing production rose 0.4% in February, in line with expectations. On a yearly basis, U.K. manufacturing production rose 1.1% in February, disappointing expectations for a 1.3% gain.
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BuBa Predicts Sharp Pain For German Banks Amid Heta Collapse
German lenders should get ready to write off at least half the value of the bonds they hold in Austrian 'bad bank' Heta Asset Resolution, Andreas Dombret, Bundesbank board member, said in an interview published on Friday.
"I think this situation has to be taken seriously by the German banks," Dombret told Bloomberg in an interview in Johannesburg, where he addressed the local chamber of commerce.
"It's advisable and recommendable to take provisions on this, and ... I would say it should be a minimum of a 50% provision for potential losses," he added.
German exposure
Heta was formed from defunct Austrian lender Hypo Alpe Adria, and last month the Bundesbank said German banks and insurers had a total exposure of €7.1 billion in the 'bad bank'.
Bayerische Landesbank, a former owner of Hypo Alpe, has the biggest exposure among German banks, at around €2.4 billion.
Commerzbank AG, Deutsche Pfandbriefbank AG, NordLB, and a German unit of Dexia SA also own Heta debt.
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price broke the support of the trading range and dropped almost 300 pips today and yesterday.
EUR/USD moves back toward parity, ending the week down more than 3%
The U.S. dollar resumed its steady ascent against the euro on Friday, amid optimistic economic data as the pair continued its move back toward parity.
EUR/USD dove 0.0059 or 0.55% to slip under 1.06 at 1.059 – its lowest level since Mar. 18. On that date, the pair gained more than 2% after relatively dovish comments from Federal Reserve chair Janet Yellen on slow GDP and wage growth fueled speculation that a looming interest-rate hike could be delayed.
EUR/USD plunged to a daily-low of 1.0568 in European afternoon trading before paring some of its losses during the U.S. morning trading session.
The pair likely gained support at 1.05, the low on Mar. 13 and resistance at $1.12, the high from Mar. 2. Earlier this week, the euro moved above 1.10 against the dollar for the first time since Mar. 25 following a disappointing U.S. monthly jobs report for the month of March.
It has declined sharply since then and finished the week down more than 3.4% down against its U.S. counterpart. For the year as a whole, the pair is down roughly 12% as the start of a €60 million a month quantitative easing program coincided with expectations that the Fed appeared ready to raise rates.
Although Yellen's comments last month may have slowed the dollar's appreciation, many analysts believe that parity is inevitable. Last month, analysts from Goldman Sachs (NYSE:GS) said they expect the euro to reach $0.95 against the dollar by March, 2016 and to continue downward to $0.80 by the end of 2017.
The U.S. Bureau of Labor Statistics (BLS) said on Friday that U.S. import prices fell 0.3% in March, marking the eighth consecutive monthly decline. More critically, prices for domestic imports fell 10.5% on a year-over-year basis from March, 2014, representing the steepest decline since 2009.
A stronger dollar is considered to be a key factor in pulling down import prices. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, ticked upward 0.43% on Friday to 99.68. The index is approximately 20% higher since last year at this time.
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EUR/USD forecast for the week of April 13
The EUR/USD pair fell hard during the course of the week as the 1.10 level continues to be resistive. The 1.05 level below has been supportive, but it would be only a matter of time before we fall below there in our opinion. We would head to the parity level at that point in time, and believe that bounces continue to be nice selling opportunities as the European Central Bank continues to offer significant liquidity measures that of course can work against the value of the Euro. We have no interest in buying.
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The EUR/USD remains in the bearish channel.
EUR/USD Forecast Apr. 13-17
EUR/USD had a hangover after Easter and it retreated from the higher range.The ECB meeting is the big event of the week, but not the only one Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Worries about Greece’s ability to pay the IMF didn’t peter out even as Greece paid. Worries about the country’s finances persist. This was coupled with not-so-good data from Germany for a change. The US data released after the NFP was already better, with a good read for the services sector. This helped the greenback recover, together. Yet the FOMC minutes sparked the greenback comeback as markets focused on the talk about a hike in June, ignoring the fact that it represented only a few members’ opinions and that the meeting was held well before the weak NFP. The result was a plunge of the pair under 1.06. Will it now challenge the 12 year lows?
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EUR/USD weekly outlook: April 13 - 17
The euro was down against the dollar for the fifth straight session on Friday, falling to one-month lows as the contrasting monetary policy stance of the European Central Bank with the Federal Reserve acted as a drag.
EUR/USD was at 1.0603 in late trade, down 0.51%. For the week the pair lost 3.57%, the worst weekly performance since September 2011.
The single currency has already weakened broadly this year after the ECB unveiled a trillion-euro quantitative easing program in January. The bank started asset purchases last month, pushing euro area bond yields to new lows.
Demand for the dollar was underpinned by expectations for higher interest rates, as investors regained confidence that the U.S. economy would continue to recover after recent economic reports pointed to a slowdown at the start of the year.
The greenback received a boost earlier in the week after comments by the presidents of the New York and Richmond Federal Reserve banks made the case for the Fed to begin policy tightening as early as the summer.
Some investors had pushed back the timing of a rate hike until late 2015 after a surprisingly weak U.S. employment report for March.
The euro was also weaker against the yen, with EUR/JPY down 0.81% to 127.48 at the close, the weakest since March 16.
In the week ahead, Wednesday’s monetary policy announcement and press conference by the ECB will be in focus. U.S. data on retail sales, inflation and consumer sentiment will be closely watched for further indications on the strength of the recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events.
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