Eur/usd - page 262
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EUR/USD: Euro Retains 10-Week Highs
In less than a month the euro has bounced from $1.05 to above $1.13. The spike in the previous session was primarily due to US dollar weakness following downbeat ADP jobs figures and Fed chair Janet Yellen's comments.
Dollar bulls were discouraged by a downbeat ADP employment report in the previous session which prompted a USD sell-off and a decline of the greenback to a three month low. The big headline miss in the ADP report heightened nervousness ahead of Friday
Employment in private firms across US climbed 169,000 last month, following a revised 175,000 rise in March, compared to anticipated an 200,000. Back in March, the figure had shown the smallest gain since January 2014 even prior to the revision.
The euro remains strongest since February 26, trading near its previous high of $1.1371 seen after Yellen's comments. During the late Asian session, the EUR/USD was flat at $1.1345, while US dollar index remains at its lowest since February 19, hovering slightly above 94.00.
"USD bulls are no doubt hopeful of a strong bounce in payrolls, reflecting firm trends in initial jobless claims and other surveys. But at the same time, those investors are understandably reluctant to stand in the way of overwhelming momentum," Raiko Shareef from BNZ Markets wrote on Thursday.
"In particular, skyrocketing European bond yields, and the impact that is having on EUR, is a critical component of broader-based USD weakness. German 10-year bund yields are up another 7bps overnight. This, along with the US data disappointment, was enough to see EUR/USD snap through important resistance at the 100-day moving average (currently 1.1260). EUR sits 1.5% stronger for the day at 1.1350," Shareef added.
Fed Chair Janet Yellen held a speech in Washington along with the International Monetary Fund's managing director Christine Lagarde, saying that the Fed had performed crucial steps in order to correct flaws in the financial system.
Janet Yellen said that equity valuations were "quite high" and that bond yields are "at very low levels," but "can move very rapidly" and her comments were followed by a sell-off in both asset classes, the S&P ending -0.5% lower and US 10-year Treasury yields rising to 2.26%.
Investors will focus on German Factory Orders, anticipated to grow 1.5% on a monthly basis, which might give the euro another push.
In the US, there are initial jobless claims, with a consensus of a rise back to 279,000.
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EURUSD rallied on yesterday session breaking above the daily resistance at 1.1236 in a strong impulsive candle. The next target is 1.1460 January low and February high that should present some challenges to the pair. The lack of choppy action is due to the market anticipating that the US non-farm payrolls and the unemployment rate will be worse than expected.
Germany's Factory Orders Show Gains in March
Factory orders in the euro zone's largest economy rose in the third month of the year after the plunge seen in the previous month, a report from the Federal Ministry of Economics and Technology revealed on Thursday.
Industrial orders in the euro area's number one economic powerhouse added 0.9% in March, measured on a monthly and seasonally adjusted basis, while analysts had expected the reading to post 1.5% growth. In the prior month, the gauge declined 0.9%.
On a yearly basis, the gauge gained1.9% in the reported month, after posting 1.3% decline in the previous month, measured on a non-seasonally adjusted basis. Markets had projected an increase of 1.9% year-on-year in March.
The seasonally adjusted figure measures total manufacturing orders received by producers of capital, intermediate and consumer goods in the country.
Manufacturing PMI in April
The German manufacturing sector revealed a slower pace of growth than that recorded a month ago, but outpacing preliminary results, a final business survey showed on Monday.
Markit's PMI for the manufacturing sector, which accounts for about a fifth of the nation's economy, fell to 52.1 during the fourth month of the year from the 52.8 seen in March.
Expansion in Germany: EC Economic Forecast
Germany’s economy is expected to benefit from the robust labor market and favorable financing conditions, while the recent decline in oil prices and the depreciation of the euro are projected to provide further impetus, the freshly published EC 2015 Spring Economic Forecast says.
According to the EC, real GDP in Germany is expected to increase 1.9% in 2015 and 2.0% in 2016, while inflation is projected at 0.3% in 2015 before rebounding to 1.8% in 2016.
source
EUR / USD had a bullish momentum yesterday, topped at 1.1369. Trading signals remain up in the near future to test 1.1450 - 1.1525. Immediate support is 1.1288. A clear break below that area could lead price to neutral zone testing 1.1200 but basically I remain in the camp of the bulls and any downward pressure should now be considered as a good opportunity for long positions.
Well again we have tomorrow the NFP. let see how the price will react to that.
EUR/USD: Euro Under Pressure of Stronger USD, NFP in Focus
An already very turbulent week for global markets seems not to be over yet, as all eyes turn to US Non-farm payrolls data.
The USD bounced off a three-month low on the back of stronger-than-expected initial jobless claims data in the previous session, while EUR slipped from $1.1392 at its peak all the way back below $1.12.
The euro was seen 0.42% lower at $1.1216 ahead of the opening bell, recovering a bit from it's intra-day low of $1.1196.
"A better initial jobless claims print ahead of tonight’s payrolls report saw the USD pick itself off two month lows on expectations of a positive payrolls print tonight," ANZ wrote in a research note on Friday.
US payrolls are expected to come in at 228,000 versus just 126,000 last month, with the unemployment rate edging down a tick to 5.4%, and average hourly earnings rising 0.2% to a 2.3% year-on-year rate. "It goes without saying that there is still room for some major market action after that release, especially given the downside surprise last month and the subsequent drop in USD," Rabobank reported in a note on Friday.
"A strong report, while likely to be broadly USD supportive over time, could aggravate recent stress in the eurozone long-end, putting more pressure on QE macro trades and contributing to renewed short-term upside pressure on the EUR," BNP Paribas wrote on Friday.
Events in Greece continue to undermine the euro as the situation shows no signs of convergence between the Syriza government and EU creditors. The Greek government remains steadfast on its red lines on labour and pension reform ahead of next Monday’s Eurogroup meeting and Tuesday’s €750 million IMF payment.
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German Industrial Production Falls as Economy Risks Grow
German industrial production unexpectedly declined in March in a sign that Europe’s largest economy remains vulnerable to global economic weakness.
Output, adjusted for seasonal swings and inflation, fell 0.5 percent after stagnating in February, data from the Economy Ministry in Berlin showed on Friday. The typically volatile number compares with a median estimate of a 0.4 percent gain in a Bloomberg survey. Production rose 0.1 percent from a year earlier.
Economic developments around the world and the stand-off between Greece and its creditors risk dragging on an accelerating recovery in the euro area, Germany’s biggest trading partner, even as the European Central Bank is making large-scale asset purchases. Yet, German business confidence is at a 10-month high and the Bundesbank predicts “quite robust” economic growth for this year.
“The fundamentals look good and German manufacturers should benefit from the weaker euro and the higher growth in neighboring countries,” said Johannes Gareis, an economist at Natixis in Frankfurt. “Yet, there are some worries, which include China’s economic struggles, the question marks hanging over the state of the U.S. economy and continuing Russian woes.”
Manufacturing output fell 0.8 percent in March from the previous month, with investment-goods production down 1.4 percent, according to the report. Industry output rose 0.5 percent in the first quarter, the ministry said, bolstered by a 2.3 percent increase in construction.
Moderate Start
“The industrial sector had an overall moderate start to the year,” it said in an e-mailed statement. “Especially manufacturing stumbled in the past months. Important sectors for the economy such as engineering and the car industry are currently lacking momentum.”
A measure of factory activity in Germany and the euro area signaled slowing output in April, according to Markit Economics. At the same time, manufacturers raised prices for the first time in eight months, providing evidence that the foundations of the feeble recovery are strengthening.
Factory orders, a gauge of future output, rose in March after two months of decline, the statistics office said Thursday. While the trend continues to be positive, orders dropped 1.5 percent in the first quarter amid sluggish export demand, it said.
First-quarter growth data will be released on May 13. Economists forecast an expansion of 0.5 percent, compared with the 0.7 percent recorded at the end of last year.
On Tuesday, the European Commission raised its economic outlook for the euro area, with gross domestic product projected to increase 1.5 percent this year, up from a prediction of 1.3 percent in February. Germany’s economy will continue outpacing the region, expanding 1.9 percent this year and 2 percent in 2016, according to the report.
source
Italy Industrial Production Eases Slightly in March
Factory activity in the euro area's number three economy worsened slightly in March, the country's National Institute of Statistics (Istat) showed on Friday.
Industrial production in Italy gained 0.4% in the third month of the year on a monthly and seasonally adjusted basis, compared to a 0.7% increase scored in February, while analysts predicted a 0.2% rise.
On an annual and working-day adjusted basis, output advanced 1.5% during the reported month, after a 0.1% contraction in February. Market analysts had bet on a 0.2% downturn.
When measured on an annual and non-seasonally adjusted basis, output rose 4.3%, compared to a 0.1% contraction reported a month ago.
Related data
Earlier this week a separate release from Italy showed the country's manufacturing sector remained upbeat in April with the respective PMI gauge hitting its one-year high.
The final manufacturing PMI for the Italian manufacturing sector rose to 53.8 in April from 53.3 booked in the previous month, while analysts had expected a reading of 53.4. The gauge hit the highest level in a one-year period.
The positive trend was also confirmed by the latest Manufacturing Confidence Index that remained boosted in the fourth month of the year.
The Manufacturing Confidence Index rose to 104.1 in April, from 103.7 measured a month ago.
The Manufacturing Confidence Index is a survey of current manufacturing conditions in Italy and indicates the performance of the sector in the short term.
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EURUSD on yesterday session had a typical profit taking day ahead of the US non-farm payrolls and unemployment rate. The pair initially rose making new high but found enough selling pressure to reverse and close in the red near the low of the day. Key levels to watch today are the support at 1.1097 and the resistance at 1.1460.
After the EUR improved to 10-week high, the correction that we see in the pair EUR/USD is now well established. This does not change the overall picture, which is a lower EU (it might bechanged later in the year), but after break of 1.1050, turning around the German government bonds and the inertia that we see, EUR/USD may lose some recent profits. USA published some weak data, but it's expected to recover in Q2.
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