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EUR/USD: Euro Trades lower Ahead of German CPI
European traders will focus on German CPI data on Wednesday morning, followed by inflation figures from France and the European trade balance. Ahead of the data, the shared European currency traded lower near the $1.06 handle.
Markets do not expect the final March CPI read to deviate a lot from the preliminary figures, hence the data is expected to show a 0.5% increase on a monthly basis and a 0.3% increase annually.
The euro traded near daily lows at $1.0627, down 0.25%, ahead of the release.
Moreover, trading volume is expected to be subdued during the early morning trade as the market stays non-committal ahead of today's European Central Bank (ECB) policy announcement and press conference at 12.30 GMT. The bank is widely expected to remain on hold after recently launching a QE program, with the program keeping the downside pressure on the euro.
"EUR is not likely to make consistent gains versus USD in coming weeks, keeping the cross rate mostly within recent (rather wide) ranges. However volatility should continue with the euro zone facing a crowded calendar of event risk through May," WIB IQ wrote in a research note on Wednesday.
German CPI March final mm +0.5% vs +0.5% flash
No shocks here from the flash forecasts
EURUSD rose on yesterday session after disappointing US Retail Sales but found enough selling pressure at 1.06806 Fibonacci level (23.6) to give back some of its gains but still closing near the high of the day. It was a typically news driven movement and the downward trend is still intact. A close above the 10-day moving average may shift the short-term trend.
EUR/USD: Pair Around $1.06, Awaits ECB
The euro dropped to $1.06 during the London session on Wednesday as traders await the European Central Bank's (ECB) monetary policy decision later in the session and the following press conference. Bank President Mario Draghi is likely to get questioned on the duration of QE and what governors see as sustainable inflation growth.
The dollar received a boost from weak Chinese data, which spurred safe-haven buying on currency markets.
The Chinese economy in the 1st quarter posted only 7% growth, down from 7.3% in Q4 in 2014, while industrial production for March dropped from 7.9% to 5.6% and missed estimates of 7.0% growth. Moreover, real GDP on a quarterly basis dipped from 1.5% to 1.3%. Retail sales for March also missed expectations, and printed only 10.2%, down from 11.9% in February, while analysts had predicted 10.9%. The slowdown in the Chinese economy is now becoming a reality, which raises the question whether the People's Bank of China will ease monetary policy further.
During the European session, German and French CPI came out in line with estimates, with the first printing 0.3% and the latter posting a 0.7% increase, both on a yearly basis.
The shared currency is still suffering from capital outflow amid negative yields and investors are searching for returns abroad, pushing the euro lower. The rallies are being sold and the bearish trend remains intact.
ECB will be careful not to trigger a EUR rally
"As we have argued previously, market sensitivity to ECB meetings will remain low in H1 as there is no scope for new policy announcements and we expect Wednesday ECB meeting to be no exception. The ECB should be happy with the impact of QE so far, implying a more upbeat assessment of the economic outlook at the press-conference and some improvement in staff macroeconomic forecasts. That said, we suspect President Draghi is well aware of the importance of expectations for QE and, echoing the minutes from the March meeting, will be keen to stress that the ECB intends to fully deliver on the previously announced policy measures as growth risks remain to the downside," analysts at BNP Paribas wrote in a note on Wednesday.
"EUR is not likely to make consistent gains versus USD in coming weeks, keeping the cross rate mostly within recent (rather wide) ranges. However volatility should continue with the euro zone facing a crowded calendar of event risk through May," WIB IQ wrote in a research note on Wednesday.
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EUR/USD: Euro Hovers at $1.06 After ECB Decision
The euro-dollar remained subdued around the $1.06 handle on Thursday after the European Central Bank (ECB) left its monetary policy unchanged, with the main refi rate staying at 0.05%.
Market participants now focus on the presser, where bank President Mario Draghi is likely to get questioned on the duration of QE and what governors see as sustainable inflation growth.
The dollar received a boost from weak Chinese data, which spurred safe-haven buying on currency markets.
The Chinese economy in the 1st quarter posted only 7% growth, down from 7.3% in Q4 in 2014, while industrial production for March dropped from 7.9% to 5.6% and missed estimates of 7.0% growth. Moreover, real GDP on a quarterly basis dipped from 1.5% to 1.3%. Retail sales for March also missed expectations, and printed only 10.2%, down from 11.9% in February, while analysts had predicted 10.9%. The slowdown in the Chinese economy is now becoming a reality, which raises the question whether the People's Bank of China will ease monetary policy further.
During the European session, German and French CPI came out in line with estimates, with the first printing a 0.3% increase and the latter posting a 0.1% decrease, both on a yearly basis.
The shared currency is still suffering from capital outflow amid negative yields and investors are searching for returns abroad, pushing the euro lower. The rallies are being sold and the bearish trend remains intact.
read more
Draghi says no backing down from QE target
With yields so low and worries about the lack of available supply for the 60 billion/month QE program, there was some chatter about the ECB backing away from its 1 trillion euro target.
He's been consistent but the euro fell a bit on the comment.
Overall, the market moves in the press conference have been minimal.
Lets see if the price will be able to make correction and break yesterday's high.
EUR/USD: Euro Jumps to Green, Buck Hit by Weak Data
The EUR/USD cross experienced a volatile trading session on Wednesday, as traders received several strong contradictory impulses to move up or down. However, as the US closing bell loomed, the pair managed to break substantially above the flatline.
The euro currency edged 0.31% higher to trade at $1.0687 against the greenback, recovering from the intraday lows as the cross retested the support area around $1.058.
Earlier in the morning, the US dollar suffered from weak macro data as the Empire State Manufacturing Index surprisingly plummeted to -1.19 in April a vast miss of a predicted hike at 7 points, while industrial production dropped 0.6% on a monthly basis in March, more than the expected dive of 0.3%.
Moreover, markets still heard echoes of yesterday's forecast by the International Monetary Fund (IMF), which downwardly revised the outlook for the US and at the same time boosted the growth outlook for the euro zone.
Later during the day, the leader of the Federal Reserve's eighth district, James Bullard favored an early start to interest rate hikes as a preemptive strike against possible asset bubbles. "Now may be a good time to begin normalizing US monetary policy so that it is set appropriately for an improving economy over the next two years,'' he said.
ECB press conference
The European Central Bank (ECB) press conference provided temporary relief for the buck as ECB President Mario Draghi repeated that the bond -buying program will continue as planned till September 2016.
The ECB's asset purchases are "intended to run until the end of September 2016 and, in any case, until we see a sustained adjustment in path of inflation," he said.
Draghi also defended the latest ELA increases for Greek banks and stated that there is no upper limit for ELA financing, but that the situation remains entirely in the hands of Greek politicians.
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EUR/USD: Euro Trades Flat, Bulls Turn to Bears
During the previous and overnight sessions the euro went through two separate rallies, rising from $1.058 to around $1.0745 during the mid-Asian session. The bulls, however, turned into bears and the euro retreated back below $1.07 ahead of the European open.
The EUR/USD was trading virtually flat at $1.0682.
The European Central Bank (ECB) left rates unchanged on Wednesday and President Draghi expressed commitment to implementing the Bank’s full QE program.
"The most exciting thing to come out of yesterday’s ECB press conference was the brief interruption of proceedings by a protestor, but aside from that we got no indication from Mr. Draghi and the ECB that they were contemplating any type of early exit from the planned QE program, despite the recent improvement in some of the latest economic data from some parts of the euro area," Michael Hewson from CMC Markets UK wrote in a early morning note on Thursday.
Euro traders will surely focus on the IMF/G20 meetings in Washington starting today and Greek Finance Minister Varoufakis's meeting with President Obama, where he will be hoping for a sympathetic hearing, as Greece pushes against its latest deadline for coming to an agreement with its creditors.
While the ECB continues to increase the ELA program incrementally, comments from German Finance Minister Wolfgang Schaueble last night appeared to suggest that any solution before next week’s finance ministers meeting in Riga on April 24th remains unlikely.