Eur/usd - page 150
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EURUSD made a new low at 1.3130 and had another negative session on Friday, but did not break below September 2013 low at 1.3102 yet. So EURUSD is expected to head to the 1.31 level, and then eventually the 1.30 level which we see as much more supportive. That being the case, we have a bearish bias and rallies should continue to offer selling opportunities.
Today in U.S. and Canada is Labour Day holiday so volumes are expected to be very light.
Eurozone manufacturing at 13-month low
The final Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) dipped to 50.7 in August, down from 51.8 in July. A figure above 50 indicates expansion.
New orders dwindled and factories suffered amid rising tensions between the EU and Russia over Ukraine.
The figures come ahead of the European Central Bank (ECB) meeting on Thursday.
Markets will be looking for a clear plan from the bank to deal with a stalled eurozone recovery, as well as the threat of deflation with inflation standing at just 0.3%.
There is speculation that ECB boss Mario Draghi could offer further indications later this week that he is considering a quantitative easing scheme for the eurozone, similar to those taken by the UK and US during the financial crisis.
German woes
"Although some growth is better than no growth at all, the braking effect of rising economic and geopolitical uncertainties on manufacturers is becoming more visible," said Rob Dobson, senior economist at Markit.
The factory PMI for Germany, Russia's biggest trade partner in the EU, fell to an 11-month low of 51.4.
Meanwhile, in the bloc's second-largest economy, France, the PMI fell to 46.9.
"France remains a real concern, as does Italy's descent from solid expansion to stagnation. Signs that growth impetus waned in the key industrial engine of Germany, and in Spain and the Netherlands too, is also less than reassuring," Mr Dobson said.
"The slowdown in industry is likely to add further fuel to the fire for analysts expecting additional monetary or fiscal stimulus to be implemented."
One positive note was from the Republic of Ireland, which saw its PMI grow to 57.3, its highest level since the end of 1999.
'Heightened uncertainty'
Howard Archer, chief economist at IHS Global Insight, said: "The best that can be said for the August eurozone manufacturing purchasing managers' survey is that it indicates that the sector is still growing."
He added: "Eurozone manufacturers are clearly finding life very difficult at the moment as current heightened geopolitical tensions - particularly related to Russia/Ukraine - add uncertainty to still challenging conditions in many countries.
"This heightened uncertainty has clearly hit business - especially, and consumer confidence, and it is likely causing some orders to be delayed or even cancelled, particularly big-ticket orders."
He said it was looking "ever more likely" that the ECB would ultimately have to undertake some form of QE, "although we suspect that it will be limited".
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The Bad News Out Of Europe Is Intensifying
All of the economic signals confirm that growth in the eurozone economy is going nowhere.
The Eurozone manufacturing purchasing managers index plunged to a 13-month low of 50.7 in August., down from 53.8 in July. This was worse than the 50.8 expected by economists.
Any reading above 50 signals growth, and the eurozone's PMI is rapidly tumbling to that no-growth level.
"Although some growth is better than no growth at all, the braking effect of rising economic and geopolitical uncertainties on manufacturers is becoming more visible," Markit's Rob Dobson said. "This is also the case on the demand front, with growth of new orders and new export business both slowing in August."
We already know that GDP growth in the Eurozone fell to 0.0% in Q2. However, the July and August data have suggests a failure to rebound in Q3.
"In one line: Alarming signs from the eurozone manufacturing sector," said Pantheon Macroeconomics' Claus Vistesen. "The downbeat economic news is intensifying."
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The USD traded unchanged or lower against most of its G10 peers during European trading morning.
The "greenback" lost ground against the NOK, GBP, CHF, EUR and NZD, in that order, while in high only against the SEK. However the currency remained stable against the JPY, CAD and AUD.
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Swiss GDP 0.0% vs. 0.5% forecast
Switzerland’s gross domestic product remained unchanged unexpectedly in the last quarter, official data showed on Tuesday.
In a report, Federal Statistical Office said that Swiss GDP remained unchanged at a seasonally adjusted 0.0%, from 0.5% in the preceding quarter.
Analysts had expected Swiss GDP to rise 0.5% in the last quarter.
Yesterday, EURUSD made a new fresh low at 1.3118 but went nowhere during a particularly light session due to U.S. and Canada Labour Day holiday. The downward trend is showing some signs of weakness with stochastic displaying oversold conditions so EURUSD is expected to pullback to the 1.32 level ahead of ECB Interest Rate Decision.
Euro zone PPI -0.1% vs. -0.1% forecast
Euro zone producer price inflation fell last month, official data showed on Tuesday.
In a report, Eurostat said that Euro zone PPI fell to a seasonally adjusted -0.1%, from 0.2% in the preceding month whose figure was revised up from 0.1%.
Analysts had expected Euro zone PPI to fall -0.1% last month.
European farmers' sanction compensation limited: minister
Germany's agriculture minister warned on Tuesday that European farmers hit by a Russian import ban would not receive full "one-to-one" compensation, ahead of talks with his French and Polish counterparts.
"Compensation in the sense of support, yes. To better get a grip on the market, yes," Agriculture Minister Christian Schmidt said in an interview on Deutschlandfunk public radio.
"But compensation sounds as if one then pays something for each apple. Yes, it will be, but not the totality," he added.
He said he wanted to avoid people getting the wrong impression that "there would be one-to-one compensation. There can't be that".
Schmidt is due to meet French Agriculture Minister Stephane Le Foll and their Polish counterpart Marek Sawiki later Tuesday in the western city of Bonn to discuss the impact of the Russian ban on the sector.
The Russian embargo, announced last month, was in retaliation for US and European sanctions over Moscow's alleged role in separatist violence in eastern Ukraine.
Set to last for a year, the Russian ban covers imports of meats, fruits and vegetables, fish and dairy products from the European Union, the United States, Australia, Canada and Norway.
The EU announced last week further measures to help European farmers affected by the Russian import ban, expanding aid to dairy products after initial steps to help certain fruits and vegetables.
Poland, the leading exporter of apples in Europe, has urged Poles to eat more apples to support its producers and has asked the US to open its market quickly to Polish apples.
Schmidt also urged people to consume more fruit.
"Eat! You should eat, I should eat, we should eat... Beginning in the early morning, five times a day," he said.
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The dollar has traded unchanged or valued relative to its G10 peers.
The USD rose against the GBP, AUD, CAD and NZD, in that order.