Eur/usd - page 224
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Deal Rumor Falls Apart As Eurogroup Says "No Deal", Greece Adds Will Not Accept Bailo
UPDATE: From Reuters: NO DEAL YET ON GREECE
And stocks and EURUSD give back almost nothing...FOMO!!
Greece to Stay in EU Bailout Program: Report - Bloomberg Business
It's Official: Deflation Infects Germany
Consumer price inflation in the euro area's biggest economy saw a downturn in the first month of 2015 measured on a yearly basis, according to the latest report from the Federal Statistics Office (Destatis) released on Thursday.
The cost of living in Germany, measured by the Consumer Price Index (CPI), dropped 0.4% in January compared to the same period a year ago, missing the flash data released at the end of the previous month and analysts' expectations of 0.3% decline. The gauge slumped to negative for the first time in over five years. In December, the gauge had booked an 0.2% increase.
Measured month-on-month, the CPI saw 1.1% decline in the reported month, below preliminary data and analysts' forecasts, and coming in well below the zero growth posted in the previous month.
The gauge measures price changes seen in consumer goods and services, including transportation, food and medical care. CPI data are important because they are used to calculate the necessary changes in the cost of living.
HICP data
A separate measure, specially developed to allow comparison between European inflation figures - the so-called Harmonized Index of Consumer Prices (HICP) - showed inflation falling at a pace of 0.5% year-on-year, compared with the previous month's 0.1% increase. The final reading confirmed previous flash estimates and was in line with market consensus.
On a month-on-month basis, the HICP edged down 1.3%, decelerating from the 0.1% growth seen in the previous month. The flash report showed the same figure, while the final gauge also matched estimates.
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EURUSD did very little to nothing during yesterday session, testing the 1.1279 level yet again. This is the new active bottom of the market, and as a result if the pair breaks above the 10-day moving average we should see a run up to 1.1459 that we have been seeing over the last several sessions.
Euro Zone Industrial Production Stagnates in December
Industrial output in the euro area showed no signs of improvement in December, the Luxembourg-based Eurostat reported on Thursday.
The output produced by manufacturers, mines and utilities in the common currency area showed 0% growth on a seasonally adjusted basis in December, compared to a downwardly revised 0.1% in the previous month and market expectations of 0.2%.
In annual terms, meanwhile, industrial production fell 0.2% working-day adjusted, ticking up from November's downwardly revised 0.8% contraction and surprisingly, on the downside, as analysts expected 0.3% growth.
Germany and France, the first and second largest economies in the area that make up about half of the euro zone's output, have already released industrial figures.
In the region's powerhouse, Germany, factory output failed to show any significant acceleration of its pace of growth in December.
Industrial output in Germany rose 0.1% in the reported period, seasonally adjusted, after reporting a revised 0.1% advance in the preceding month, according to Destatis.
On the other hand, French industrial activity recovered and emerged in positive territory, advancing 1.5% in December when measured on a monthly basis, after a revised 0.2% decline in November.
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Euro Slightly Recovers, US Data Coming
The euro was safely above the $1.1300 handle, but had picked up from initial lows that came as negotiations between European Union members' finance ministers and Greek officials as yet have failed to bring a breakthrough. Meanwhile, US retail sales and weekly jobless claims are awaited.
The euro edged up 0.07% to $1.1342, correcting from its intraday low of $1.1301.
US figures eyed
The amount of retail trade in the US is expected to fall 0.4% in January, measured on a monthly basis, while a 0.5% drop is projected excluding auto.
Initial jobless claims are likely to rise to 287,000 in the week ending February 7, from 278,000 a week before.
Business inventories are forecast to rise 0.2% in December, the same pace of growth that was booked in the month before.
Euro area monitored
Euro zone finance ministers and Greece made no compromise over the country's huge debt and austerity measures at the Eurogroup meeting in Brussels, as expected, with talks due to resume on Monday.
Eurogroup's Dijsselbloem briefed the press, saying that while they had made progress with Greece, this was not enough to come to joint conclusions, adding "I have no real conclusions to share, we will continue talks on Monday." Dijsselbloem also said that "it's not about wording but about the amount of progress, not enough".
In the meantime, over 15-hour-long peace talks between leaders of Russia, Ukraine, Germany and France have resulted in an agreement that a ceasefire in Ukraine should start on Sunday, February 15.
Technical Analysis
EUR/USD is moving sideways on intraday charts as it reached a multi week low at $1.109. The currency cross established a trading range between $1.15 and $1.11, which on a daily timeframe looks like a so-called downtrend continuation pattern "bearish flag formation".
One trading idea is based around major support and resistance zones and buying the dips and selling the spikes as long as these levels hold, because if the euro decides to go even lower it should take a longer break in its correction phase.
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the price was consolidated around the support level but failed to break under it and started a correction.
EUR/USD shoots above 1.14 on dollar weakness, Ukraine ceasefire and despite Greece
EUR/USD is making a move out of range and shooting above 1.14. Finally, after too many freezing days in a narrow range around 1.13. The peak so far is 1.1422.
US retail sales dropped by 0.8%, double the early expectations. The US dollar has been on the back foot also against other currencies.
FOMC member Charles Plosser, which is known hawk is also disappointed with the data. Hearing relatively dovish words from a hawk probably weighs on the dollar as well.
It’s important to note that when excluding autos and gas (which dropped sharply with global oil prices), sales rose by 0.2% – a pale silver lining.
The euro is not worried about the lack of progress on the Greek crisis. The Eurogroup deliberations ended in no conclusion, with a more important meeting on Monday.
The optimism about a solution for Ukraine is also good news for the euro. Putin announced a ceasefire agreement has been reached in Ukraine. While it is still to be seen if this time is different and that it lasts, lower tensions between Russia and the West serve as an economic boost to the German economy.
Resistance awaits at 1.1460, which was a low for the pair on its way down. Further resistance stands at 1.1540.
Support is at the November 2003 at 1.1373, followed by 1.1290.
Tomorrow we have initial GDP data from the euro-zone.
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Recession? No, Thanks: German Q4 GDP
GDP for Germany revealed that the largest economy in Europe moved further away from recession territory in the final quarter of 2014, according to provisional data provided by the Federal Statistical Office (Destatis) on Friday.
Economic output in Europe's powerhouse posted 0.7% growth in the three-month period ending December 2014, after showing a meager 0.1% improvement in the third quarter, measured on a quarterly basis. The reading was well above the growth projected by analysts.
Calculated on a yearly and non-seasonally adjusted basis, the gauge revealed a 1.6% increase, exceeding analysts' estimates, and better than the previous quarter's 1.2% upturn.
Economic outlook
"Germany’s economic growth is expected to strengthen gradually with the support of a robust labor market and favorable financing conditions underpinning domestic demand, and improving external demand," according to the latest economic forecast from the European Commission (EC) so-called Winter Economic Forecast.
"The continued decline in oil prices should have a positive effect on growth but will also temporarily significantly lower inflation. Corporate investment is forecast to resume hesitantly, while public investment is expected to pick up further. The general government budget should remain in surplus over the forecast horizon," the EC says.
Based on the EC's forecast, GDP is expected to increase by a moderate 1.5% in 2015, helped also by more working days, and to accelerate to a rate of 2.0% in 2016.
Consumer prices are forecast to rise only slightly by 0.1% in 2015 and more strongly by 1.6% in 2016.
Unemployment rate is expected to edge down by one notch in both 2014 and 2015, coming in at 4.9% and 4.8%, respectively.
Moreover, the German Chambers of Commerce (DIHK) on February 11 considerably lifted its growth outlook for 2015, as lower oil prices and a weaker euro are expected to boost Europe's powerhouse, despite the Ukraine crisis and uncertainty about Greece's future in the euro.
The DIHK said the German economy will expand more strongly this year than previously expected. It raised its growth forecast for this year to 1.3% of GDP from 0.8% forecast previously.
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French Non-Farm Payrolls Stagnate in Q4
The number of employed people in the second largest economy in the euro area increased in the fourth quarter of 2014, according to a report from France's National Institute of Statistics and Economic Studies (INSEE).
Measured on a quarterly basis, the preliminary non-farm payrolls reading for France stagnated in the reported quarter, after shrinking 0.3% in the quarter ended September 30, INSEE reported on Friday. Market analysts had expected a 0.2% decline in the fourth quarter.
The gauge represents the change in the number of employed people throughout all sectors excluding the farming industry, public administration, education, and health and social services.
Labor market and inflation outlook
"With the slow recovery, the labour cost reductions...are likely to have only a limited positive impact on employment in the short term. Therefore, over the forecast horizon, these employment gains will be insufficient to absorb the growth of the labor force, and unemployment is therefore expected to remain high," according to the European Commission Winter Economic Forecast..
"Falling energy prices are projected to further reduce inflation to zero in 2015. Prices are then set to accelerate moderately and reach 1.0% in 2016, as the output gap starts to dwindle and inflationary pressures generated by the euro depreciation and the ECB's new monetary policy are felt," the document says.
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