Eur/usd - page 234
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EUR/USD: Dollar Continues Near 12-Yr High After ADP
The US dollar stayed well boosted against the euro on Wednesday, in reaction to an estimate missing ADP jobs report, as the January's imprint was revised up.
The greenback swung up 0.45% to $1.1124, close to its intraday-high $1.1115 earlier in the day, approaching its highest level since September 2003.
The US economy added 212,000 new jobs to its private sector in February, while analysts estimated Automatic Data Processing's report to show 219,000 positions were created, compared to an upwardly revised 250,000 added last month.
Looking ahead, the most crucial number from the US economy, the non-farm payrolls report, is due on Friday and will be closely watched as the next Federal Reserve meeting looms.
Services PMIs
Earlier in the day, the US dollar was underpinned by a set of estimate-missing euro zone PMIs, as Spain, Italy, France and Germany all booked a below-expected print of services PMI, while in the euro zone, the services PMI hit 53.7 points last month, slightly worse than the 53.9 predicted by the market.
Meanwhile, Eurostat published retail sales figures for the whole euro area, with growth of 1.1% and 3.7% for January on a monthly and annual basis, respectively, an improvement from December's figures and also better than analysts' had expected.
Technical analysis
EUR/USD is extending its downtrend on intraday charts, after a huge sell-off and consolidation from the mid $1.13's level. The current swing low lies at $1.1148.
From a bigger perspective, EUR/USD is now on the way to lows from January at $1.1096 after a very short lived correction, lasting a little bit over a month.
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EUR/USD crashes to new multi-year lows at the 1.10 handle
What began as a fall to a smaller lower range turned into an avalanche: EUR/USD now trades at 1.1087, below the January 26th lows, sending it to the lowest levels since 2003 – nearly 12 years.
The move came just before the ISM Non-Manufacturing PMI that came in as expected at 56.9 points.
The low so far is 1.1079 before we have seen a bounce back. Update: a second move down sends the pair to 1.1073. And the move goes on, with further pressure.
It is important to note that the euro ignores positive euro-zone data and that the ECB decision tomorrow looms large.
The ECB is expected to present details of the implementation of QE. This QE program is the main driver of the euro lower. The exact implementation details do not matter too much. What matters is how the ECB sees the situation: perhaps optimistic on growth but probably still worried about inflation and keeping the leg on the pedal.
The positive impact of a weaker euro is felt in the euro-zone, but an “all clear” message could derail the recovery while it is still in its infancy. Draghi would probably prefer a weaker euro.
Support awaits at the round level of 1.10, followed by 1.0875. Resistance is at 1.1150 (weak) followed by the round number of 1.12.
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EUR/USD continue the downtrend after breaking the support level 1.1150 price now has no restrains to push lower. positive nonfarm payroll this week might push the price under 1.1000
EUR/USD: Euro Plunges to 12-Yr Low, ECB Eyed
The euro extended its losses from the previous session and fell to its lowest since September 2003. The 19-nation currency fell throughout the week, on the back of solid US macroeconomic figures and despite rather positive fundamentals coming from the euro zone.
The euro hit fresh lows in late Asian trade, falling to $1.1038 its lowest level in almost twelve years. The retreat was initiated by a stronger dollar in the previous session, on the back of solid US figures, which kept hopes of a summer rate hike alive.
The EUR/USD was trading at new cyclical lows and was set to test the $1.10 handle as bears continue to dominate the market, selling any potential rally.
Later today European Central Bank (ECB) President Mario Draghi will hold a presser, closely watched by market participants for any details of the bond-buying programme announced in January alongside with the release of updated macroeconomic forecasts.
"Importantly, the ECB will be buying more European bonds than are being issued by sovereigns as part of their funding requirement, so in effect we are seeing negative net issuance. By its very nature, this will keep European bond yields low, so in turn we should see US bond yields blow out against European bond markets. The end result should be a weaker EUR," Chris Weston from IG wrote in a research note on Thursday.
EURUSD fell during yesterday session hitting 1.1061 a fresh eleven-year low, breaking below daily support at 1.1097 that should now act as a resistance. The pair closed near the low of the day on with an impulsive candle. Stochastic in showing an oversold market but even with the pair well into oversold territory, we should not fight the strong downward trend.
Polish Central Bank Cuts Rates to 1.50%
Poland’s central bank cut its main borrowing costs by 50 basis points to 1.50%, the lowest on record, to ward off the threat of deflation.
The last rate cut implemented by the central bank came in October 2014 when the main borrowing cost was slashed by 50 basis points to 2% from the previous 2.5%.
However, the officials also noted the cut was the last in the bank's current easing cycle, as the Polish economy continues to grow at a sustained pace. In 2014, it advanced 3.3% and the central bank expects the rate of growth to remain above 3% over the next two years.
The cut was likely prompted by an update to the bank's economic projections, presented to rate setters, which probably showed deflation persisting two or even three quarters longer than previously forecast, according to Grzegorz Ogonek, a Warsaw-based economist at ING Bank Slaski.
Falling prices of food and oil on international markets have taken a toll on Polish consumer prices, with consumer price inflation well into negative territory at -1.3% in annual terms in January. The central bank's target is an inflation rate of 2.5%.
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ECB Keeps Hands Off Rates; Draghi's Q&A Awaited
The European Central Bank (ECB) left its benchmark rates intact at their record lows on Thursday - in what turned out to be a low impact decision, as the move had been widely expected.
So, Europe's benchmark lending rate remains at a record low of 0.05%, while its deposit rate will stay at -0.20%, effectively charging lenders for holding their deposits with the central bank.
Meanwhile, the marginal lending facility rate (which shows the rate for overnight credit to banks from the Eurosystem) remained at 0.30%.
All three rates were last trimmed in September, and since then, several of the bank's top policymakers have suggested that they won't go lower, as it would have no significant effect on the economy.
Presser ahead
Attention will now focus on the press conference, with markets gasping for Draghi to serve them details of soon-to-be launched Quantitative Easing (QE) program. Previously, the bank said its money printing would last "at least" until September 2016 and until a "sustained adjustment" in the inflation path emerges.
Adding to that, the bank will unveil its first staff projection this year, with analysts betting that the currency zone's GDP growth forecast will be improved for both 2016 and 2017, while its inflation estimate will be updated downwardly.
Euro hits fresh 11-year lows after Draghi remarks
The euro fell to fresh 11-year lows against the dollar on Thursday after European Central Bank President Mario Draghi said its quantitative easing program will continue until September 2016, or beyond if necessary.
EUR/USD hit lows of 1.1008, the weakest level since September 2003 and was last at 1.1031, down 0.44% for the day.
Draghi confirmed that the ECB will begin purchasing euro zone government bonds on March 9 under its new quantitative easing program.
The combined asset purchases will amount to €60 billion per month and are expected to run until September 2016, or until the ECB sees that inflation is on a “sustained path” to its target of close to, but below, 2% in the medium term.
The euro weakened after Draghi indicated that the bond purchasing scheme could extend beyond September 2016 “if needed.”
Draghi said the announcement of easing has already helped the euro zone economy and added that it should improve the outlook for growth and reduce economic slack.
The recent fall in the oil price should also help the euro zone economy, Draghi said, by boosting household spending and cutting firms’ costs.
The ECB raised its growth forecast for this year to 1.5% from 1.0% previously, followed by faster growth in 2016 and 2017.
But its cut its inflation forecast for 2015, saying it now expects inflation to be flat, down from 0.7% previously. It then expects inflation to increase to 1.5% in 2016, up from 1.3% and 1.8% in 2017.
The euro fell to fresh seven year lows against the pound, with EUR/GBP down 0.39% to 0.7229 and was at one-and-a-half month lows against the yen, with EUR/JPY sliding 0.26% to 132.24.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies rallied to fresh 11-year highs, advancing 0.45% to 96.41.
In the U.S., data on Thursday showed that the number of Americans who filed for unemployment assistance rose by 7,000 to 320,000 from the previous week’s total of 313,000.
The U.S. was to release what would be a closely watched employment report on Friday, after recent economic reports supported expectations for higher interest rates.
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Well the ECB announce the start of the purchasing plane and kept the interest rate the same and the EUR/USD keep falling and tomorrow we have the non-farm payroll. lets see how far the pair will go.
EUR/USD < 1.10 – Draghi drags it down
The avalanche continues and for good reasons. EUR/USD broke below the round number of 1.10 and is trading at yet a new 11 year low. These levels were last seen early in the previous decade.
The main driver is simply monetary policy divergence. The ECB is beginning its QE program, with Draghi explaining the implementation, and the Fed is about to tighten.
Draghi had quite a few things to say. Here are 6 takeaways from the ECB and an assessment that it was a bearish statement.
In recent days, there has been more evidence of the upcoming move from the Fed: Janet Yellen has paved the road for a removal for forward guidance, and hints towards tomorrow’s Non-Farm Payrolls imply a stronger than expected figure.
And here is the full preview: See how to trade the Non Farm Payrolls with EUR/USD.
The markets are totally ignoring positive euro-zone data. Specifically today, even that did not help, with German factory orders plunging.
The pair traded in range throughout most of February, and leaned lwoer towards the end of the month. An initial move lower expanded to break below 1.11 which then saw a second leg lower.
We are now seeing the next move. So far, joining the downhill ride was pretty straightforward: a pause followed every fall, and this was followed by a subsequent “dead cat bounce” and another fall.
But with this breach of 1.10, could we see a significant bounce back? Or is this indeed an avalanche that is not set to stop anytime soon?
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