Eur/usd - page 182
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Euro zone factory growth sluggish in Oct as prices fall - PMI
Euro zone manufacturing activity expanded slightly slower than first thought last month as further discounts at the factory gate failed to drive up new orders, a business survey showed on Monday.
A second month of price cutting, alongside only tepid expansion in Germany - the euro zone's growth engine - and contractions in France and Italy, will be disconcerting for the European Central Bank as it battles to prevent deflation.
Economic growth stalled in the second quarter. With inflation at just 0.4 percent in October, the ECB is facing pressure to introduce more stimulus.
Markit's final October manufacturing Purchasing Managers' Index was 50.6, beating September's 50.3 but shy of an earlier flash estimate of 50.7. October marked the 16th month the index has been above the 50 line that separates growth from contraction.
An index measuring output, which feeds into a composite PMI due on Wednesday that is seen as a good indicator of growth, rose to 51.5 from September's 51.0, although that too was lower than the flash reading, which came in at 51.9.
"The performance of euro zone manufacturing remained broadly flat at the start of the final quarter," said Rob Dobson, senior economist at Markit. "Manufacturing is therefore unlikely to provide any meaningful boost to the currency union's anaemic GDP growth."
The latest PMI survey suggested this month will probably not be much better as orders fell, backlogs were run down and stocks of finished goods built up. The new orders subindex was 49.5, barely above the flash and September reading of 49.3.
"Perhaps most worrying is the trend in new orders, a key bellwether of future output growth, which declined for the second month running," Dobson said.
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Hi, thanks for the good news.
thanks for the news
Price action in EURUSD remained relatively quiet having plunged to levels not seen since August 2012 overnight, after the pair tripped sell stops at the 1.2500 handle on a strengthening USD to break below Friday's lows at 1.2485. The pair moved sideways heading into the European close, having consolidated below the 1.2500 level. In terms of notable events the EU PPI reading for September will be in focus alongside ECB’s Coeure (Dove) and Costa (Soft Dove).
Euro zone PPI rises 0.2% in September
Producer price inflation in the euro zone rose for the first time in three months in September, easing concerns over the threat of deflation, official data showed on Tuesday.
In a report, Eurostat said that its producer price index inched up by a seasonally adjusted 0.2% in September, compared to expectations for an increase of 0.1%. Producer prices inched down 0.2% in August.
Year-over-year, the producer price index declined at an annualized rate of 1.4% in September, compared to forecasts for a drop of 1.5%. Prices fell at a rate of 1.4% in August.
EUR/USD was trading at 1.2510 from around 1.2511 ahead of the release of the data, while EUR/GBP was at 0.7821 from 0.7823 earlier.
Meanwhile, European stock markets remained higher. The DJ Euro Stoxx 50 rose 0.25%, France’s CAC 40 advanced 0.2%, Germany's DAX tacked on 0.45%, while London’s FTSE 100 inched up 0.15%.
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EU cuts growth and inflation forecasts – will the ECB act?
The European Union cuts its 2014 growth forecast to 0.8%, 1.1% in 2015. This follows cuts to German forecasts.Also inflation has been cut down to 0.5% for 2014 and 0.8% in 2015. 2014 is already lost, but with 0.8% in 2015, this is far below the 2% target for the ECB .Can we see more action from the central bank?
EUR/USD seems doubtful, still holding on to 1.25.
For Germany, GDP is expected to grow by 1,3% in 2014 and 1.1% in 2015. This seems quite optimistic after recent German figures and is higher than the German forecasts.
Reminder: German PMIs did NOT forecast Q2 contraction – recession certainly possible
To be fair, they do see a stagnation in the German economy in the second half of the year.
The European Commission is optimistic for 2016: a growth rate of 1.7% for 2016 and inflation at 1.5%.
Regarding France, they see business confidence as remaining weak.
EUR/USD is actually ticking higher after this publication, basically ignoring the forecasts. Perhaps it is rising on top of a better than expected Producer Price Index release: +0.2% in September, better than 0% forecast.
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Central bankers to challenge Draghi on ECB leadership style
National central bankers in the euro area plan to challenge European Central Bank chief Mario Draghi on Wednesday over what they see as his secretive management style and erratic communication and will urge him to act more collegially, ECB sources said.
The bankers are particularly angered that Draghi effectively set a target for increasing the ECB's balance sheet immediately after the policy-making governing council explicitly agreed not to make any figure public, the sources said.
"This created exactly the expectations we wanted to avoid," an ECB insider said. "Now everything we do is measured against the aim of increasing the balance sheet by a trillion (euros)... He created a rod for our own backs."
Irritation among national governors who hold a majority on the 24-member council could limit Draghi's space for bolder policy action in the coming months as the bank faces crucial choices about whether to buy sovereign bonds to combat falling inflation and economic stagnation.
Some members intend to raise their concerns with Draghi at the governors' traditional informal working dinner on Wednesday before their formal monthly rate-setting meeting on Thursday, the sources interviewed by Reuters said.
Many people at the central bank, which manages a single currency for 18 European Union member states, welcomed Draghi's greater informality when he took over from Jean-Claude Trichet of France in 2011. His efforts to keep meetings short, delegate and brainstorm more, were received as a breath of fresh air.
However, as decisions to loosen monetary policy and resort to further unconventional measures have become more contentious, insiders say the Italian ECB chief has acted increasingly on his own or with just a handful of trusted aides, sidelining even key heads of department.
"Mario is more secretive... and less collegial. The national governors sometimes feel kept in the dark, out of the loop," said one veteran ECB insider.
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EUR/USD gains as dollar rally takes a breather
The euro firmed against the dollar on Tuesday after softer-than-expected U.S. factory orders gave investors excuse to sell the greenback for profits.
The U.S. currency has posted strong gains in recent sessions as U.S. monetary policy has grown less accommodative while Europe and Japan have headed in the opposite direction.
In U.S. trading, EUR/USD was up 0.65% at 1.2566, up from a session low of 1.2481 and off a high of 1.2571.
The pair was likely to find support at 1.2441, Monday's low, and resistance at 1.2772, last Wednesday's high.
U.S. factory orders fell for a second consecutive month in September, dampening optimism over the strength of U.S. recovery, official data revealed earlier.
The U.S. Census Bureau reported earlier that factory orders declined by 0.6% in September, in line with market expectations though still a decline nonetheless.
The August figure was revised to a 10% contraction from an initial 10.1% decline.
The numbers gave investors room to sell the greenback for profits, wiping out gains stemming from divergent monetary policies coupled with upbeat U.S. manufacturing, consumer sentiment and economic growth reports.
Elsewhere in the U.S., the Bureau of Economic Analysis said the country's trade deficit widened to $43.03 billion in September from $39.99 billion in August, whose figure was revised from a previously reported deficit of $40.1 billion.
Analysts had expected the U.S. trade gap to widen to $40.0 billion in September.
The single currency held well into positive territory despite downward revisions made to the continent's growth forecasts.
The European Commission cut its forecast for euro zone economic growth to 0.8% this year from a 1.2% forecast made in the spring, while the 2015 growth forecast dipped to 1.1% from 1.7%.
The commission added it expects euro area inflation to remain below the European Central Bank's target of close to but just below 2% until after 2016 at the earliest and warned that unemployment levels will remain at their current high levels for longer than previously expected.
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Eurozone economic forecast cut by European Commission
The forecast is below the 1.2% estimate made earlier this year. The commission has also has cut its growth forecast for 2015 to 1.1% from 1.7%.
EU vice president Jyrki Katainen said "the economic and employment situation is not improving fast enough".
The report predicts that inflation in the eurozone will continue to be low and employment high.
Continuing weakness in France and Italy would keep the brakes on recovery, it said.
The EU executive said the eurozone's economy would not now reach a growth rate of 1.7% until 2016.
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Andrew Walker, BBC economics correspondent, writes:
The Commission's new forecasts are gloomy for sure, but they do represent an improvement on where the eurozone is now. The most recent figures on actual, rather than predicted, performance showed no growth at all and declining economic activity in Germany. That was the second quarter of this year. So we will need better than that if the Commission's projections for 2015 are going to be fulfilled. Maybe they will be. Gradually, the ECB has taken steps to stimulate the economy. There could be more in the coming months and the restraint caused by austerity is easing. There are certainly signs of improvement in some of the casualties of the crisis, notably Spain and Ireland. But there are now concerns about the big economies - Italy, which is not new, France, and even Europe's traditional powerhouse, Germany.
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The director general of the commission's economics department, Marco Buti, said the roots of the eurozone's troubles were in the global credit crunch of 2008.
"The slowdown in Europe has occurred as the legacy of the global financial and economic crisis lingers," he said.
"We see growth... coming to a stop in Germany... protracted stagnation in France and contraction in Italy."
The eurozone's woes are also central to the recovery in the rest of the world.
Both the UK and the US, whose economies have been picking up, are being held back by slow demand in the eurozone.
Eurozone inflation is forecast to be 0.5% this year, 0.8% in 2015 and 1.5% in 2016, While this is well below the European Central Bank's target of close to 2%, it means that deflation, considered at least as dangerous as high inflation, should be averted.
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price is rebounding I think it's a good entry point to buy with no resistance level until 1.2590