Eur/usd - page 24
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European Shares Decline; Benchmark Stoxx 600 Index Falls
European stocks declined, after the Stoxx Europe 600 Index rose the most in eight weeks, as investors awaited U.S. manufacturing data. U.S. index futures and Asian shares advanced.
The Stoxx 600 slipped 0.3 percent to 302.06 at 10:10 a.m. in London. Standard & Poor’s 500 Index futures advanced 0.8 percent after U.S. markets were closed yesterday for the Labor Day holiday. The MSCI Asia Pacific Index jumped 1.3 percent.
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EUR/USD falls as U.S. factory gauge boosts dollar demand
The dollar firmed against the euro on Tuesday after a widely-watched U.S. manufacturing barometer beat expectations and sparked demand for the greenback by stoking sentiments the Federal Reserve will begin scaling back stimulus programs this month.
In U.S. trading on Tuesday, EUR/USD was down 0.34% at 1.3148, up from a session low of 1.3144 and off from a high of 1.3197.
The pair was likely to find support at 1.3068, the low from July 18, and resistance at 1.3398, last Wednesday's high.
The Institute for Supply Management reported earlier that its August purchasing managers’ index rose to 55.7 from 55.4 in July, beating analysts' calls for a 54.0 reading.
The report cemented views held by many that the Federal Reserve could start to unwind its USD85 billion monthly bond-buying program at its upcoming Sept. 17-18 policy meeting.
Monthly asset purchases weaken the dollar to spur recovery as long as they remain in effect, and talk of their dismantling can bolster the greenback.
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Germany Car Sales Decline In August
Germany's car registrations were down 5 percent in August from a year ago, data released by the German Association of the Automotive Industry (VDA) showed Tuesday.
New car registrations totaled 214,100 units in August. The report showed that this August had fewer working-day than in the previous year.
Sales for the year-to-date period decreased by 7 percent to 1.97 million.
VDA President Matthias Wissmann emphasized that domestic orders continued its uptrend despite an overall decrease in registrations. Demand from domestic markets gained 2 percent in August.
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Euro close to 6-week lows vs. stronger dollar
he euro was steady close to six-week lows against the stronger dollar on Wednesday as expectations that the Federal Reserve will soon start to taper stimulus and concerns over tensions with Syria bolstered dollar demand.
EUR/USD hit 1.3162 during late Asian trade, the session low; the pair subsequently consolidated at 1.3165, dipping 0.04%.
The pair was likely to find support at 1.3137, Tuesday’s low and a six-week low and resistance at 1.3196, Tuesday’s high.
Data on Tuesday showed that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in August. The upbeat data reinforced the view that the Fed could start to unwind its stimulus program at its upcoming policy meeting on September 17-18.
The Institute for Supply Management said its purchasing managers’ index rose to 55.7 in August from a reading of 55.4 in July. Analysts had expected a reading of 54.0.
Investors were looking ahead to Friday’s U.S. nonfarm payrolls report which is seen as central to the Fed’s decision on tapering.
Meanwhile, concerns over a U.S. military intervention against Syria’s government weighed after the Republican House Speaker John Boehner endorsed President Obama's call for military strikes.
The euro edged lower against the pound, with EUR/GBP slipping 0.05% to 0.8459 and pushed higher against the yen, with EUR/JPY easing up 0.10% to 131.28.
The euro zone was to release data on retail sales later Wednesday, while the U.S. was to publish a report on the trade balance.
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EUR/USD September 4 – Little Movement as Eurozone Posts Mixed PMIs
EUR/USD is showing little movement in Wednesday trading, as the pair continues to trade in the mid-1.31 range in the European session. US releases started the week on a positive note, as the Manufacturing PMI hit its highest level in over two years. On Wednesday, Eurozone Services PMI numbers were a mix. Spanish and Eurozone Services PMIs posted gains, while Italian Services PMI missed the estimate.
Eurozone Retail Sales posted a weak gain and missed the estimate. In the US, today’s highlight is Trade Balance. The markets are expecting the deficit to widen in the September reading.
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Eurozone Escapes Recession On Exports, Demand
Strong recovery in domestic demand and exports helped the euro area economy to exit its longest recession on record, as initially estimated, during the second quarter.
Retail turnover data, released today, showed a marginal recovery in consumer spending in July driven by a rebound in food sales. Elsewhere, the Purchasing Managers' survey results confirmed that economic recovery is gaining traction into the third quarter.
The Eurozone private sector expanded at the fastest pace in more than two years during August with strong support from Germany. While Italy and Spain both moved out of contraction zone, France remained in negative territory, survey data revealed.
Gross domestic product expanded 0.3 percent quarter-on-quarter, in line with flash estimate, latest figures from Eurostat showed Wednesday. The contraction for the first quarter was revised down to 0.2 percent from 0.3 percent.
The second quarter figure was the biggest since the start of 2011, when GDP grew 0.8 percent. The 17-nation economy entered the recession in the first quarter of 2012 and remained in negative zone until the first quarter of 2013.
On a yearly basis, GDP dropped 0.5 percent, instead of the 0.7 percent fall estimated on August 14, it said.
The expenditure side breakdown of GDP showed a broad-based recovery among all sub-components. Household spending gained 0.2 percent sequentially, nullifying last quarter's 0.2 percent fall. After declining 2.2 percent in the first quarter, investment grew 0.3 percent.
Government spending advanced 0.4 percent, following nil growth in the preceding quarter. Exports were up 1.6 percent versus a 1 percent drop a quarter ago. Similarly, imports gained 1.4 percent after falling 1.1 percent.
Another report from Eurostat said retail sales rose 0.1 percent in July from a month earlier, when it fell 0.7 percent. Sales were forecast to grow by 0.2 percent.
Sales of food, drinks and tobacco increased 1 percent month-on-month, which was partially offset by a 0.4 percent drop in non-food sales.
Year-on-year, retail sales declined 1.3 percent in July. This was faster than a 1.1 percent fall reported in June and a 0.3 percent drop expected by economists.
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Eurozone Confirms Q2 GDP Growth
The euro area economy exited its longest recession on record as initially estimated during the quarter ended June, second estimate from Eurostat showed Wednesday.
Gross domestic product expanded 0.3 percent quarter-on-quarter, in line with flash estimate. The contraction for the first quarter was revised down to 0.2 percent from 0.3 percent.
On a yearly basis, GDP dropped 0.5 percent, instead of the 0.7 percent fall estimated on August 14.
The expenditure side breakdown of GDP showed that all sub-components expanded from the prior quarter. Household spending and investment recovered in the second quarter with 0.2 percent and 0.3 percent growth, respectively.
Government spending advanced 0.4 percent after staying flat in the preceding quarter. Exports were up 1.6 percent and imports gained 1.4 percent, it said.
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ECB Keeps Rates Unchanged As Expected
The European Central Bank on Thursday left its interest rates unchanged for the fourth successive month in September.
The Governing Council led by ECB President Mario Draghi held the main refinancing rate unchanged at a record low 0.50 percent as expected. In May, the bank slashed the rate by quarter-basis points, which was the first rate cut in nine months.
The bank also kept the marginal lending facility rate at 1 percent, following a 50 basis points cut in May. The zero deposit rate was also left unchanged.
Draghi is set to hold the post meeting press conference at 8.30 am ET in Frankfurt, where he is expected to reiterate the July guidance that euro area interest rates are set to remain low for an 'extended period' of time with economic recovery gaining steam in the region.
The ECB is also set to unveil the latest staff macroeconomic projections on Thursday. Economists are looking forward to a modest upgrade to June's forecasts of 0.6 percent contraction for this year and 1.1 percent growth for 2014. In June, the bank saw inflation for this year at 1.4 percent and the figure for 2014 at 1.3 percent.
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EUR/USD September 5 – Falls on Worrisome ECB, Strong US data
EUR/USD tried to recover, but an attempt to break over the previous day’s highs failed, and the pair eventually fell to lower ground. The euro was hit by a worried Mario Draghi, that called the euro-zone recovery “green”. And the dollar got a boost from an excellent ISM Non-Manufacturing PMI as well as other solid figures. The case for QE tapering seems very strong, and the pair seems vulnerable.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar
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Draghi Reiterates Forward Guidance
The most important take away from Draghi's initial remarks is that he has reiterated the forward guidance that rates will remain this low or lower for an extended period. There were some suspicions, given clear signs of an economic recovery, judging from the PMI data, which Draghi did acknowledge.
Draghi also revealed that the new staff forecasts envision slightly better economic performance than seen in June. The region's economy is expected to contract 0.4% this year rather than 0.6%. Next year's growth is expected to be 1.0% vs 1.1% seen previously. Draghi sees risks to the downside.
Inflation is low and expectations anchored. The staff see CPI this year at 1.5% vs 1.4% seen in June. Next year's forecast is unchanged at 1.3%. The risks, he says, on inflation, are balanced. He sees the upside risks coming from administrative prices and indirect taxes. Weaker growth poses downside risks.
Euribor futures have firmed and the curve has flattened a bit in the initial response to Draghi's prepared remarks and the euro has come off about half a cent. Look for initial support near yesterday's low just below $1.3160, but Tuesday's low near $1.3140 may be more important.
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