Eur/usd - page 199
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TLTRO: €129.84 billion – unimpressive – EUR/USD down
A not so impressive TLTRO auction: 129.84 billion euros. It is higher than the previous auction but not impressive at all, to say the least.
EUR/USD is sliding to 1.2417.
The second tender of the TLTRO was expected to raise around €150 billion according to a consensus of economists. The first tender in October raised only €82.6 billion. The figure today has a significant impact on the likelihood of QE: a weak outcome raises the chances for action by the ECB in January, while a higher number would allow the central bank to wait.
EUR/USD traded around 1.2440 towards the publication. — more coming —
Here is the preview: TLTRO: 3 scenarios for EUR/USD
In the recent rate decision, ECB President Mario Draghi offered a “wait and see” approach. On the other hand, he did say that QE does not require a unanimous vote and did shrug off legal worries regarding buying sovereign bonds.
Simply put: if the ECB launches QE, the euro falls. Otherwise, it rises.
EUR/USD dips as dollar advances on upbeat U.S. retail sales
The euro softened against a firming dollar on Thursday after data revealed U.S. retail sales came in stronger than expected in November, fueling hopes for a busy holiday shopping season.
In U.S. trading, EUR/USD was down 0.49% at 1.2387, up from a session low of 1.2362 and off a high of 1.2495.
The pair was likely to find support at 1.2245, Monday's low, and resistance at 1.2507, the high from Dec. 1.
The U.S. Commerce Department reported earlier that retail sales rose 0.7% last month, beating expectations for a gain of 0.4%.
October's retail sales growth figure was revised up to 0.5% from 0.3%.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy.
Core retail sales, which exclude volatile transportation items, advanced 0.5% in November, easily surpassing forecasts for a 0.1% increase. Core sales in October rose by 0.4%.
Core retail sales correspond closely with the consumer spending component of the government's gross domestic product report. Consumer spending accounts for as much as 70% of U.S. economic growth.
Thursday's retail sales numbers boosted expectations for the Federal Reserve to hike interest rates earlier in 2015 than once anticipated, which gave the dollar support.
Elsewhere, the U.S. Department of Labor reported that the number of individuals filing for initial jobless benefits in the week ending Dec. 6 fell by 3,000 to 294,000, beating market calls for the figure to increase to 299,000, which also supported the dollar by boosting optimism over the health of the U.S. labor market.
The number of Americans applying for new jobless benefits has held below the 300,000-level for 12 out of the past 13 weeks.
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EUR/USD continues to rise with the breaking of the downward trend line.
It confirmed the formation of the 'morning star' candle on the daily chart.
However, the increase stopped by the moving average of 200 periods.
The short-term momentum is positive and even the long-term decline is losing momentum.
R3 - 1.25612
R2 - 1.25043
R1 - 1.24755
Daily Std. Pivot - 1.24186
S1 - 1.23898
S2 - 1.23329
S3 - 1.23041
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Pressure Builds On ECB For QE After TLTRO Take-up Disappoints
Subdued demand for longer-term loans at the European Central Bank's second offering this month has boosted the case for a full-blown quantitative easing to meet its goal of boosting the balance sheet by EUR 1 trillion and to avert the threat of deflation in the euro area.
In the latest targeted longer term refinancing operation, or TLTRO, 306 banks were allotted EUR 129.84 billion of the EUR 317 billion offering, the central bank said on Thursday. The number of bidders rose from 255 in September and the amount grew from EUR 82.60 billion. Economists had expected the take-up to be between EUR 140-150 billion.
In June, two TLTRO auctions were announced for this year. The first was held in September and the second in December. The total funds on offer under eight TLTRO operations are EUR 400 billion.
The allotment in the latest auction was full at a fixed rate of 0.15 percent and the maturity date is September 26, 2018.
The take-up in the December operation was "within the ECB's and market estimates and expectations", ECB board member Benoit Coeure said.
With the total take-up in both operations at EUR 212 billion falling short of the EUR 400 billion offered, economists cast doubt on the ECB's goal of boosting its balance sheet by EUR 1 trillion. They also expect the central bank to opt for a full blown quantitative easing.
Further, the 3-year LTRO loans issued in 2011 and 2012 are set to mature in February. The outstanding amount to be repaid by banks is nearly EUR 300 billion.
This implies that net lending operations will cause the ECB's balance sheet to contract, Capital Economics economist Jennifer McKeown said. The disappointing loan take-up by banks is another worrying indication that they do not intend to lend, either because of their own risk aversion or a lack of demand, the economist added.
"Today's lower-than-expected allotment will raise fresh doubts about the feasibility of the ECB's intention to increase its balance sheet by around EUR 1 trillion - through the TLTROs and their covered bond and ABS purchases," ING Bank economist Martin van Vliet said.
"As such, today's result further shortens the odds of the ECB launching full-blown QE in Q1 of next year."
Capital Economics' McKeown continues to expect the ECB to announce an initial tranche of asset purchases of around EUR 250 billion in January.
After leaving rates unchanged at a record low for a third straight month last week, ECB President Mario Draghi said policymakers will reassess the impact of the stimulus measures already taken early next year and reiterated that the bank stands ready to take further action if required to avert deflation.
"This would imply altering early next year the size, pace and composition of our measures," he said.
Draghi also said that ECB staff and other Eurosystem committees concerned have stepped up the technical preparations for further measures.
The proposals for boosting the ECB balance sheet to EUR 1 trillion and buying sovereign bonds face stiff opposition from different quarters, especially from the most influential state - Germany. While there has been some speculation of the bank discussing the purchase of corporate bonds.
Yesterday, ECB Governing Council member and Estonia's central bank chief Ardo Hansson said the central bank buying government bonds is too risky and is likely to bring little benefit.
The bank already started buying covered bonds and asset-backed securities, measures which were announced in September.
source
EURUSD initially tried to rally to the 1.25 handle on yesterday session but found enough resistance to turn back down. The pair ended up rolling towards the 1.2350 level, an area of significant support. Once the pair gets below it, Bears will show their claws, and the price will head down to the 1.2250 level. A daily close above the 1.25 handle will shift the mid-term trend to bullish.
TLTROs disappoint
The result of the TLTROs was rather disappointing as the uptake came in at the lower end of targets. The main issue with this is that the ECB’s balance sheet is more likely to contract when the earlier loans are repaid next year, so without going into the realm of purchasing sovereign debt, returning the ECB’s balance sheet to its 2012 levels is going to be very hard work. The euro reaction was quiet initially and traders didn’t know quite what to make of the €130b figure but it has only served to heighten many people’s expectations of full blown QE early next year. If there’s anything that the last few years have taught investors, it is that trying to predict what action the ECB will take is impossible and we can only go with the information and statements they give at their monetary policy meetings. At this month’s meeting the message that further stimulus measures will be taken early in 2015 was stronger than normal (“early means early” in the words of Mario Draghi).
Despite this and the dip in inflation data for Spain, France and Germany the euro has held up well as EURUSD trades above 1.2400 at the time of writing. Some dollar buyers were tempted back into the market yesterday following three consecutive days of declines in the dollar index and USDJPY managed to get back above 119.00 but is trading at 118.75 this morning. The week ends on a quiet not but we do see Eurozone unemployment data and industrial production this morning with the Michigan Consumer Sentiment data to conclude proceeding this afternoon. This data can often move the market so one to watch out for particularly since it is due to rise from 88.8 to 89.5 and could be the next trigger for dollar buying.
source
EUR/USD gains on mixed U.S. sentiment, pricing data
- The euro firmed against the dollar on Friday after markets digested mixed U.S. wholesale price and consumer sentiment data, which prompted investors to sell the greenback for profits.
In U.S. trading, EUR/USD was up 0.49% at 1.2468, up from a session low of 1.2362 and off a high of 1.2495.
The pair was likely to find support at 1.2245, Monday's low, and resistance at 1.2496, Thursday's high.
The dollar has rallied against the euro and other currencies in recent months on expectations for U.S. monetary policy to grow less accommodative while European and Asian central banks move in the opposite direction.
On Friday, mixed U.S. data allowed for profit taking.
The Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to a nearly eight-year high of 93.8 this month from 88.8 in November. Analysts had expected the index to rise to 89.7 in December.
The data came after the U.S. Department of Labor reported that the U.S. producer price index fell 0.2% last month, surpassing expectations for a 0.1% downtick, after rising 0.2% in October.
Core producer price inflation, which excludes food, energy and trade, was flat in November, confounding expectations for a 0.1% rise, after an increase of 0.4% the previous month.
Meanwhile in Europe, the single currency found support after data showed that industrial production in the euro zone rose 0.1% in October, in line with expectations, after a 0.5% increase in September, whose figure was revised from a previously estimated 0.6% gain.
Year-on-year, the bloc's industrial production increased 0.7% in October, beating expectations for a 0.5% rise, after a revised 0.2% uptick in September.
Elsewhere, the euro was up against the pound, with EUR/GBP up 0.52% at 0.7929, and up against the yen, with EUR/JPY up 0.30% at 147.72.
source
EUR / USD had no strength to continue to rise to meet resistance near the moving average of 200 periods.
Began to to trade again below the falling trend line.
However, as the positive difference between the short-term oscillators and the price action is still active and the possibility of a higher minimum and another break above the trend line still exists.
R3 - 1.2606
R2 - 1.2546
R1 - 1.2505
Daily Std. Pivot - 1.2445
S1 - 1.2404
S2 - 1.2344
S3 - 1.2303
EUR/USD Forecast Dec. 15-19
EUR/USD experienced new lows but made a big comeback, riding on USD weakness . In the last full week of the year, we have a busy schedule with PMIs, important German surveys and final inflation data among other events. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
The second tender of the ECB’s TLTRO fell short of expectations, at just under €130 billion. Together with unimpressive other measures, it seems that QE in the euro-zone is imminent, perhaps already in January. Industrial output and some second tier inflation figures also came short of expectations. However, EUR/USD was saved by the weakness in the US dollar, that retraced the post-NFP gains despite some positive data such as the upbeat retail sales number. What’s next for the pair?
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