Eur/usd - page 47
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ECB's Mersch: More Efforts Needed To End Crisis, Strengthen EMU
Despite the encouraging signs, more efforts are needed to bring an end to the European crisis and strengthen the monetary union, European Central Bank Executive Board member Yves Mersch said on Friday.
"We can clearly see that investor confidence is slowly returning, that the persistent euro area financial market fragmentation is decreasing and that contagion is receding," the policymaker said at an investment conference in London.
"This does not mean that the euro area and its member countries can rest on their laurels."
The steps remaining are completion of the policy agenda, freeing of investment, resumption of financing via the banking channel and propping up capital market reform with regulation, he said.
The policymaker noted that the euro area crisis brought to light the shortcomings of the original design of the monetary union. He also acknowledged that much progress has been made over recent years in strengthening the union, both at national and supranational level.
"Recent financial market developments clearly demonstrate the credibility of the reform measures taken at European and national level - although progress is unevenly distributed," Mersch said.
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Italy Current Account Swings To Surplus In September
Italy's current account in September revealed a surplus versus a deficit in the same month last year, data released by the Bank of Italy showed Friday.
The current account surplus was EUR 227 million compared to EUR 985 million deficit in the year-ago period.
Capital account revealed a shortfall of EUR 136 million, which was in contrast to the EUR 170 million surplus last year.
The financial account plunged into a deficit of EUR 3.208 billion from a surplus of EUR 2.748 in the same month of 2012.
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EUR/USD Forecast November 18-22
EUR/USD made a small recovery after two weeks of falls. Is it headed higher once again? Or is it just a correction before the next leg down? German ZEW and IFO business indicator and PMIs are among the main events this week. Here is an outlook for these events among others, and an updated technical analysis for EUR/USD.
Last week, Eurozone GDP disappointed, with a small climb of 0.1% in Q3, suggesting recovery remains fragile. French and Italian preliminary GDP declined by 0.1%, below market consensus. German preliminary GDP was in line with forecasts, but was lower than the 0.7% expansion registered in September. Greece remains weak despite the troika’s 240 billion euros aid injected since 2010. The Greek government is expected to reduce a2 billion euros from its 2014 budget which seems unlikely at this point. Will the Eurozone be able to boost growth in the coming weeks? Let’s start:
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Swedish Industrial Capacity Utilisation Highest Since 2012
Capacity utilisation in Sweden's industrial sector improved in the third quarter, reaching its highest level in more than a year, Statistics Sweden said on Friday.
The seasonally adjusted capacity utilisation rate rose to 86.9 percent from 86.1 percent in the June quarter. The latest rate is the highest since the second quarter of 2012, the agency said.
The biggest improvement was witnessed in the automobile industry, where capacity utilisation increased by 3.4 percentage points sequentially to 91.7 percent.
Year-on-year, the calendar-adjusted capacity utilisation rate increased by 0.3 percentage points to 87.1 percent. The marginal increase was the first positive annual development since the third quarter 2011, when capacity utilisation grew modestly, the agency said.
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EUR/USD weekly outlook: November 18 - 22
The euro rose to one week highs against the dollar on Friday as comments by Federal Reserve Chairwoman nominee Janet Yellen were seen as supportive of the bank’s monetary stimulus program.
EUR/USD ended Friday’s session at 1.3497, up from Thursday’s close of 1.3457. For the week the pair rose 0.66%.
The pair is likely to find support at 1.3417, Thursday’s low and near-term resistance at 1.3525.
The greenback turned lower after testimony from Federal Reserve Vice Chairwoman Janet Yellen on Thursday was seen as cementing the view that the bank will keep its USD85 billion-a-month asset purchase program in place until early next year.
Ms. Yellen said it was "imperative" that the Fed does everything in its power to ensure a robust recovery. She said the quantitative easing program would not continue indefinitely but the timescale for reducing it would be data dependent.
The comments came during a Senate confirmation hearing to take over from Ben Bernanke as head of the central bank in February.
Sentiment on the greenback was also hit by unexpectedly weak U.S. manufacturing data on Friday.
The Federal Reserve’s Empire state manufacturing index fell to -2.21 this month from 1.52 in October. Economists had forecast a rise to 5.0.
A separate report showed that U.S. industrial production fell 0.1% in October, after rising by 0.7% in September, compared to expectations for a 0.2% increase.
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Too many banks survived crisis: regulator
Too many European banks survived the financial crisis, the head of Europe's banking regulator said in a newspaper interview on Monday.
"I'm convinced that too few European banks were dismantled and disappeared from the market," European Banking Authority (EBA) chief Andrea Enria told the daily Frankfurter Allgemeine Zeitung in an interview.
"Barely 40 (disappeared), compared with around 500 in the United States," he said.
"Governments wanted to keep their banks alive and that has hampered the healing process" of Europe's financial system, Enria said.
The EBA organised a series of stress tests for European banks in recent years which have been criticised as being too lenient.
Europe is currently in the process of setting up a new banking union to strengthen its financial system. And Enria is favour of putting in place truly Europe-wide structures, he told the Financial Times.
"You need European decision mechanisms rather than having always a committee-type of decision in a crisis," he said.
"Committees in a crisis don't work because you have conflicts."
And he added: "They give us responsibilities but they put so many national safeguards on every task we need to do that sometimes I am concerned we will not be able to perform [them]."
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EU welcomes Spanish bank reform, warns on deficit
The European Union on Monday welcomed efforts by Spain to repair its banking sector but warned that the country risked missing its public deficit-cutting targets.
Spain is poised in January to exit a programme to shore up its banks' balance sheets, swamped in bad loans since a property bubble imploded in 2008.
Last year, the eurozone agreed to make a rescue loan of up to 100 billion euros ($135 billion) to fix the banks. Madrid has used 41 billion euros of the total credit.
"The stabilisation and repair of the financial sector have advanced further amid tentative signs of economic recovery," the European Commission said in a review of the banking reforms.
"The timely and adequate implementation of the policy conditionality of the programme, together with visible progress with growth-enhancing structural reforms, has been accompanied by a return of investor confidence," it added.
"A continuation of the positive trends is required for the successful completion of the programme according to the planned timeline."
The European Commission, which sent a mission to Madrid from September 16-27, said investors' confidence in Spain had gradually returned, allowing Madrid to tap the financial markets for funds.
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German Employment Grows Steadily In Q3
Germany's employment growth maintained a steady pace in the third quarter, data released by the Federal Statistical Office showed on Tuesday.
The number of employed grew by 0.6 percent or 253,000 year-on-year in the three months to September. Employment also rose 0.6 percent in the second quarter.
Employees grew 0.8 percent in the third quarter, same as in the previous three months. Meanwhile, the number of self employed declined for the fifth quarter in a row, down 0.9 percent in the three months to September.
In the third quarter, the total number of employed was 42.03 million versus 41.80 million in the previous three months. It was the first time that the number of employed exceeded 42 million persons in any quarter, the agency said.
Sequentially, employment increased 0.6 percent or by 236,000 persons in the third quarter.
On a seasonally adjusted basis, the number of employed increased 0.2 percent or by 70,000 persons from the second quarter.
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Euro Gains to Highest in Four Years Versus Yen on ECB Comments
The euro rose to a four-year high against the yen after a European Central Bank board member said policy makers must be “very careful” about using negative interest rates to counter low inflation.
The dollar touched an almost two-week low on speculation Federal Reserve speakers including Chairman Ben S. Bernanke will reiterate economic growth isn’t yet sufficient to trim its bond-buying program known as quantitative easing. A gauge of global volatility fell to its lowest level this month. Economists forecast that a report tomorrow will show U.S. retail sales increased in October after dropping the previous month.
“There was suspicion the ECB might be on the verge of doing something aggressive, like QE and negative rates, but the commentaries from ECB we’ve had since than have been scaling back from it,” Geoffrey Yu, a senior foreign-exchange strategist at UBS AG in London, said in an interview. “Maybe there’s some correction to that.”
The euro rose 0.3 percent to 135.42 yen at 11:26 a.m. New York time after touching 135.57, the strongest since November 2009. The shared currency gained 0.2 percent to $1.3526 after reaching $1.3543, the strongest level since Nov. 6. The dollar rose 0.1 percent to 100.13.
The Bloomberg U.S. Dollar Index, which monitors the greenback against 10 major counterparts, fell 0.1 percent to 1,014.92 after touching 1,013.11, the lowest since Nov. 6.
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ECB's Praet: Eurozone Recovery Frail, No Risk Of Deflation
The economic recovery in Eurozone is fragile, but there is no risk of deflation, European Central Bank Executive Board Member Peter Praet said on Tuesday.
In a speech in Frankfurt, Praet said, "A recovery has started, but it is still in its infancy and fragile."
Global environment remains uncertain, structural reform and fiscal sustainability needs to be completed and financial sector regulation must be thoroughly revamped, the policymaker added.
On November 7, the ECB sprung a surprise by cutting the key interest rate by a quarter-point to a record low 0.25 percent, given the combination of low inflation, record unemployment and a stronger currency.
"We still have not reached the effective lower bound," Praet said. "And we still have not exhausted our standard policy lever..."
Praet said the ECB decided to cut interest rates this month because the bank expects inflation to remain weak, near levels close to the lower half of its price stability range, for an extended period of time. The ECB aims to keep inflation "below, but close to 2 percent".
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