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EUR/USD: Euro Swings Lower, Hampered by Greek Saga -
The euro was seen flat on Friday as the endless Greek saga kept markets under pressure. With the crucial IMF payment due next week, markets are starting to ponder of Greece applying for the so-called Zambia option allowing the debt ridden country to roll up the payments due in June to a single one, in order to buy more time.
Greece is due to make four payments to the IMF in June: a €308 million payment on June 5, another €347 million on June 12, followed by a payment of €578 million on June 16 and €347 million on June 19, making it the final deadline, rather than Friday next week.
The euro was seen down 0.09% at $1.0939 before the European market open in Frankfurt after rebounding as high as $1.0966 overnight in Asia.
On the other side of the Atlantic, a set of rather positive macro data from the US and Yellen comments in particular have shifted the attention of the market participants back to the Fed rate hike timing, helping the dollar to regain this year's strongest positions against the euro earlier this week.
"Janet Yellen’s remarks last Friday that she expected rates to rise this year and that the recent slowdown seen in Q1 is likely to be transitory, though some of the recent data seen from April does throw some elements of doubt into that belief," Michael Hewson from CMC Markets noted on Friday.
With the US first quarter GDP revisions Friday, market expectations vary from a 0.2% miss seen in its first reading a month ago, down to a -0.8% decrease. This is a substantial move downward compared to the first estimate of Q1 GDP, when markets expected a 1.0% rise and the central projection was for a June interest rate hike.
Whatever the revisions to first quarter GDP data today, investors are likely to focus their attention on next week's set of crucial data, including payrolls and the ISM indices.
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EURUSD had a high volatile session yesterday but manage to close in the green near the high of the day. The currency has to the upside strong resistance at the 10 and 50-day moving averages although the stochastic is showing an oversold market and is displaying a slight bullish momentum.
EUR/USD: Euro Swings Higher, Hampered by Greek Saga
The euro was seen with gains on Friday as the endless Greek saga kept markets under pressure. With the crucial IMF payment due next week, markets are starting to ponder of Greece applying for the so-called Zambia option allowing the debt ridden country to roll up the payments due in June to a single one, in order to buy more time.
Greece is due to make four payments to the IMF in June: a €308 million payment on June 5, another €347 million on June 12, followed by a payment of €578 million on June 16 and €347 million on June 19, making it the final deadline, rather than Friday next week.
The euro was seen up 0.13% at $1.0960 before the European market noon in Frankfurt, after hitting its three day high of $1.0974 earlier in the seesion.
On the other side of the Atlantic, a set of rather positive macro data from the US and Yellen comments in particular have shifted the attention of the market participants back to the Fed rate hike timing, helping the dollar to regain this year's strongest positions against the euro earlier this week.
"Janet Yellen’s remarks last Friday that she expected rates to rise this year and that the recent slowdown seen in Q1 is likely to be transitory, though some of the recent data seen from April does throw some elements of doubt into that belief," Michael Hewson from CMC Markets noted on Friday.
With the US first quarter GDP revisions Friday, market expectations vary from a 0.2% miss seen in its first reading a month ago, down to a -0.8% decrease. This is a substantial move downward compared to the first estimate of Q1 GDP, when markets expected a 1.0% rise and the central projection was for a June interest rate hike.
Whatever the revisions to first quarter GDP data today, investors are likely to focus their attention on next week's set of crucial data, including payrolls and the ISM indices.
read more
US GDP will by more than -0.8% - expect Euro to jump
The upward trend from 1.0816 is still relevant even in quite corrective style , which puts the focus on the main resistance at 1.1050. Critical level downward is yesterday's intraday minimum at 1.0860.
EUR/USD: Euro Rises on US Data Fatigue, Athens Limits Jump
The euro currency experienced an humble gain against the greenback on Friday, recovering for the third day in a row from its monthly low at $1.0819. However, more profound gains were limited by the dollar's headaches from today's macro updates and the never-ending European affair with debt-burdened Athens.
"The GDP data was largely in line, slightly better than what the market expected," Macquarie global interest rates and currency strategist Thierry Albert Wizman mentioned.
The euro climbed 0.36% to $1.0987 against the buck before the closing bell on Friday, failing to stay above the round number of $1.10.
As mentioned, the greenback had to deal with a set of frail US data starting with the sluggish GDP second estimate, which confirmed the well-known weak performance of the US economy in the first quarter of 2015.
Later in the morning, additional disappointment arrived when the Chicago PMI fell far below expectations, as May's figure stood below the 50 point threshold for the third time since February. Meanwhile, the University of Michigan consumer confidence dived from a three-month high to a six-month low in the same month.
In Europe, there has been no progress in talks between Greece and its creditors, but government officials in Athens said they hope the deal will be done by Sunday, despite skeptical euro zone representatives, who said more has to be done before the deal can be signed.
Looking at the economic figures, retail sales in Germany rose 1.7% in April on a monthly basis, while annually the release grew only 1.0%, following a 4.3% gain previously.
Italy's economy expanded 0.3% in the January-March period, quarter-on-quarter, meeting estimates, while it rose 0.1% on a yearly basis, according to the recent data. Both readings improved from the fourth quarter.
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EU Preview: Another Climax in Never-Ending Greek Drama
Market watchers are heading for a busy week ahead, with the ECB and BoE policy meetings, manufacturing and services PMI figures for May and fresh labor data from several major euro zone economies. The Greek crisis and Athens' ability to fulfill the first of four June payments to the IMF will remain in the center of attention as well.
The European Central Bank's (ECB) Governing Council will meet in its Frankfurt HQ to set monetary policy for the euro zone. ECB President Mario Draghi will give a press conference after the policy-setting session.
The central bank will certainly pay attention to the euro zone's May inflation data estimate published on Tuesday and April labor data due on Wednesday, seeking indications of the impact its signature QE program is having in the real economy.
In April, consumer prices growth in the euro zone remained at the flat 0.0% level, month-on-month and 0.6%, year-on-year. It is expected to add 0.2% in the fifth month of the year on a monthly, and 0.7% on an annual basis, giving reason for some relief to the ECB policymakers.
However, the unemployment rate in the single currency area is coming down only very slowly. The rate of registered unemployed in the region was 11.3% in March, and it is expected to marginally decline to 11.2% in the fourth month of 2015.
Even so, Greece and the current status of ongoing debt negotiations with its creditors -- the ECB being one of them -- will likely be at the center of the Governing Council's deliberations, although it is highly unlikely that the central bank would approve any loosening of funding for debt-ridden Greece as an imminent measure.
Greek epic drama drags on
Greece's debt crisis will be entering another week without any clear indication about the direction it may take. Meanwhile, the final €7.2 billion bailout trance is on hold, as Athens' international creditors try to make the Alexis Tsipras' government revamp Greece's economy according to their demands. Most analysts agree that the country will need a new bail out program to meet financial needs and obligations after the current €240 billion rescue package expires in one month.
"There is lot of noise coming from the ongoing negotiations, but few tangible results or clues about actual progress have emerged so far. Let’s try to sort out some of the latest comments and noise clouds," Carsten Brzeski, chief economist at ING, wrote in a note to clients on Friday.
"While the Greek government is spreading the positive word by saying that a deal with the European creditors was within reach, the rest of the Eurozone and the International Monetary Fund (IMF) sound less optimistic," he noted.
Deal in the making?
Even so, there were reports earlier that a deal was actually in the making. The deal including softer fiscal targets, a leaner reform list and eventually even some debt forgiveness.
However, it has been one example of confusing negotiating tactics on the lenders' side, when the European Commissioner Pierre Moscovici prepared a draft agreement for an extension of the Greek bailout in February. Reuters reported that he showed the document to Greek Finance Minister Yanis Varoufakis before a Eurogroup meeting and Greece was happy to agree with it.
Yet, at the beginning of the session Varoufakis was handed a different text, prepared by Eurogroup Chair Jeroen Dijsselbloem, which was not acceptable for Greece. The meeting ended in acrimony.
"In our view," Brzeski writes, "there is still a possible outcome at the end of a long and exhausting negotiation process. However, in such a deal, monitoring and surveillance would be crucial. Would the Greek government accept the Troika after all? And would the German parliament agree to such a deal without European control?" he asks.
It is not easy to find a silver lining in the jungle of confusing and often opposing comments and declarations. Also, one shouldn't forget that at least some of the comments from both sides, either from the euro zone/IMF or from Athens, are definitely just an attempt to increase pressure. The Greek government’s optimism probably stems from a need to avert a bank run in Greece, while the institutions are trying to make Greece agree to their terms.
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Thank you for the news Have a nice weekend.
EUR/USD Forecast June 1-5
EUR/USD extended its slide for another week as the dollar surged but gradually recovered The ECB rate decision is the key event alongside PMIs Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Yet again, optimism and despair around Greece had their impact on the common currency. The upcoming deadline of June 5th might be more serious than the previous ones. The euro did manage to gain back some ground on the back of more upbeat euro-zone data, mostly from Germany and Spain. In the US, good data helped the local currency. The greenback seemed to enjoy every small economic beat while mostly ignoring misses on economic indicators.
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EUR/USD weekly outlook: June 1 - 5
The euro moved higher against the dollar on Friday after data showed that the U.S. economy contracted in the first quarter, but continued expectations for a rate hike later this year continued to underpin dollar demand.
The Commerce Department said U.S. gross domestic product contracted at an annual rate of 0.7% in the first three months of the year, instead of the initial estimate of 0.2% growth. However, it was still better than economists’ forecast of a 1% contraction.
EUR/USD was up 0.37% to 1.0988 in late trade, but the single currency ended the month down 1.89% against the broadly stronger greenback.
The single currency remained under pressure as Athens continued long-running negotiations with its lenders on a cash-for-reforms deal ahead of a €305 million payment to the International Monetary Fund due on June 5.
The Greek government expressed confidence on Friday that a deal with creditors is close.
However, the country’s creditors have played down optimism over an agreement. IMF head Christine Lagarde warned Friday that a deal was very unlikely to come soon, while the European Commission said that more work must be done.
The dollar strengthened broadly in May as stronger U.S. economic data prompted investors to bring forward expectations on the timing of an initial rate hike by the Federal Reserve.
Upbeat reports on inflation, new home sales, business investment and consumer confidence during the month all indicated that the economy is gaining momentum after a weak first quarter.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased to 96.94, holding below Wednesday’s five week peaks of 97.88. The index ended the week up 0.92%, bringing the month’s gains to 2.35%.
In the week ahead, Friday’s U.S. employment report will be closely watched for signs of improvement in the labor market. Tuesday’s preliminary data on euro area consumer prices and Wednesday’s European Central Bank monetary policy announcement will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
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