Eur/usd - page 53
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Greek parliament approves 2014 budget plan
Greece's parliament approved a budget plan on Saturday filled with over 3 billion euros of austerity cuts that sees the debt-laden country emerging from a six-year recession next year.
After nearly going bankrupt and almost crashing out of the euro zone last year, Greece expects growth of 0.6 percent in 2014 and hopes to secure more leeway on its debts to the European Union and the International Monetary Fund.
"This is a historic day," Prime Minister Antonis Samaras told lawmakers, calling the 2014 plan a budget of recovery and hope. "People's sacrifices bore fruit and changed the course of the country."
Outside parliament, an anti-austerity rally called by the country's largest labour unions drew only a few hundred people, a shadow of former demonstrations where tens of thousands took to the streets of Athens to protest the belt-tightening.
A total of 153 lawmakers voted in favour of the 2014 budget plan in the 300-seat house. Samaras' conservative-led coalition controls 154 seats in parliament.
Athens sees a budget surplus before interest payments at 812 million euros in 2013 thanks to higher than expected tax revenues. Posting a primary surplus is key as it would open the way for Greece to pursue debt relief from the EU and IMF.
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EUR/USD weekly outlook: December 9 - 13
The euro rose to five week highs against the dollar on Friday as the dollar shrugged off a report showing that the U.S. economy added more jobs than expected in November.
EUR/USD ended Friday’s session at 1.3705, the strongest level since October 31. For the week, the pair was up 1.20%, the fourth straight weekly gain.
The pair is likely to find support at 1.3618, Friday’s low and resistance at 1.3745.
The U.S. economy added 203,000 jobs in November, above expectations for jobs growth of 180,000, the Labor Department said. The unemployment rate fell to a five year low of 7.0% from 7.3% in October.
The report came one day after official data showed that the U.S. economy grew at an annual rate of 3.6% in the three months to September, well above the preliminary estimate for 2.6%.
The robust data raised the possibility that the Federal Reserve may start to scale back its USD85 billion-a-month asset purchase program as soon as its next monthly meeting on December 17 - 18.
Demand for the single currency continued to be underpinned after European Central Bank President Mario Draghi indicated that further monetary easing by the bank is not imminent.
The ECB left rates on hold at record lows of 0.25% on Thursday, as widely expected. The bank raised its growth forecast for 2014 to 1.1% from 1.0% and predicted growth of 1.5% in 2015.
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Euro in favour as brisk U.S. jobs data lifts risk appetite
The euro raced to a near six-week high against the dollar and scaled a fresh five-year peak versus the yen on Monday after strong U.S. payrolls data boosted risk appetite despite threats of a possible reduction in the U.S. monetary stimulus.
The closely watched U.S. payrolls report on Friday showed employers hired more workers than expected in November, driving the jobless rate to a five-year low of 7.0 percent.
"The financial markets interpreted the data as suggesting there's no need to be pessimistic about the global economy, leading to risk-on trades," said Minori Uchida, chief currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
The dollar initially rose on the data, which added to speculation that the Federal Reserve could start scaling back stimulus this month. Tighter U.S. monetary policy means less dollars to go around in markets, and is seen positive for the dollar.
But sharp gains in stocks led currency traders to quickly switch their positions to bet on higher risk appetite, which tends to depress the dollar -- and the yen even more.
The euro rose to as high as $1.3748 from $1.3701 late in New York on Friday, spurred by a wave of stop-loss buying after $1.3710 was breached in very thin early trade. It later recoiled to $1.3711.
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German industry output posts surprise fall in October
German industrial output posted a surprise fall in October, easing 1.2 percent on the month in its steepest decline since May - although the economy ministry reassured the weak start to the fourth quarter would be quickly overcome.
The fall compared with a Reuters consensus forecast from 38 economists for a 0.8 percent rise. A two-month average for September and October showed output easing 0.5 percent, data published on Monday showed.
"After high output levels in the second and third quarters supported by catch-up effects, output made a weak start to the last quarter. Industrial orders suggest upwards momentum however and construction orders are good," the ministry said.
It added that strong sentiment data also suggested output would improve in the next months.
German industrial orders posted their biggest fall in nearly a year in October, data last Friday showed, but the trend remained upward and the Bundesbank sent a more positive signal by raising its forecasts for growth of Europe's largest economy this year and next.
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Euro advances on better money market conditions, China data
The euro hit a six-week high versus the dollar and a five-year peak against the yen on Monday, helped by tighter money market conditions in the euro zone and strong trade numbers from China, which boosted investor tolerance for riskier currencies.
Europe's common currency remained resilient despite Friday's better-than-expected U.S. nonfarm payrolls report, tepid economic conditions in the euro zone and constant reiteration by European monetary officials that interest rates would remain low for some time.
The euro is within striking distance of its year highs reached in late October when the currency hit $1.3832.
Over the weekend, China reported its exports came in well above forecast in November, rising 12.7 percent from a year earlier, while imports rose 5.3 percent.
"The strong labor data out of the U.S. and the robust trade balance numbers from China suggest that global growth may be better than the consensus view," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.
"Under that scenario, both the U.S. and China could act as locomotives for global GDP expansion and help lift the euro zone out of its funk."
The euro traded at $1.3739, up 0.26 percent, having been as high as $1.3745. Short-term interest rates in the euro zone money market edged up with the chances of more easing by the European Central Bank looking slim for now, underpinning the euro.
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Europe tries to cut deal to close failing banks
Europe is seeking to agree by year-end on how to close failing banks, part of an ambitious plan to create a single banking framework and fix broken lenders whose problems have festered since the financial crisis.
The main issues are: Who decides and who pays?
Under pressure to strike a deal before an EU leaders' summit next week, euro zone finance ministers tried to resolve differences on the first of two days of talks on Monday.
Despite ministers' optimism for a deal on Tuesday, when EU counterparts from outside the euro zone will join the talks, Germany remained opposed to any scheme that would allow the use of the bloc's rescue fund.
Creating an agency to close euro zone banks, as well as a fund to pay for the clean-up, would mark a deepening of integration of the 17 nations sharing the euro. But it raises complex questions of sovereignty and who will foot the bill.
Banking union, involving a single bank supervisor for the bloc and an 'executioner' to close banks, is the most ambitious project launched since the region's debt crisis and is designed to provide a stronger underpinning to the single currency.
"There's a chance (of a deal). It will be a lot of work," said Germany's Finance Minister Wolfgang Schaeuble.
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Euro hits six-week peak on banking deal view; dollar falls
The euro rose to a six-week high against the dollar on Tuesday, helped by expectations of a banking deal in the euro zone and a growing view that the Federal Reserve would need additional positive data before it can decide to reduce its economic stimulus.
Europe's common currency gained for a sixth straight day versus the greenback and is within sight of this year's high of $1.3832.
The euro's rise caused the dollar index to extend losses into a second straight day. It fell to six-week lows, dragged down by lower U.S. Treasury yields, as investors have pretty much removed the prospect of a reduction in the Fed's asset purchases this month. The dollar index was down 0.3 percent at 79.91
But the market's focus has been on the euro and its resilience.
European Union finance ministers, meeting in Brussels, are likely to create a banking union with powers to close down failing euro zone banks. The issue is crucial as a banking union is widely viewed as shoring up the euro zone against future debt and financial crises.
"There's some expectation that a deal may be reached before year-end, and that is supportive of the euro," said Sireen Harajli, currency strategist at Mizuho Bank Ltd. in New York.
On the monetary policy side, a combination of the European Central Bank's less-dovish tone and the failure to focus on negative interest rates at the last meeting has also underpinned the euro.
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Fitch Affirms Czech Republic at 'A+'; Outlook Stable
Fitch Ratings has affirmed Czech Republic's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'A+' and 'AA-' respectively. The issue ratings on Czech Republic's senior unsecured foreign and local currency bonds are also affirmed at 'A+' and 'AA-' respectively. The Outlooks on the Long-term IDRs are Stable. The Country Ceiling is affirmed at 'AA+' and the Short-term foreign currency IDR at 'F1'. KEY RATING DRIVERS The affirmation and Stable Outlook reflect the following factors: -The Czech Republic benefits from a strong macroeconomic policy framework, low private sector indebtedness, a resilient labour market and a stable banking sector.
At 6.8%, unemployment is well below the eurozone average of 12.1%, while household debt/income is barely half the EU27 average of 115%. Nonetheless, despite an absence of serious macroeconomic imbalances, the Czech economy has struggled to break out of a prolonged recession, reflecting its close ties to the eurozone and weak domestic demand. -Real GDP in 2013 is expected to have contracted 0.9%. This compares with Poland and Hungary, whose economies are projected to have grown by 1.4% and 0.7%, respectively, this year. Two years of recession since end-2011 has left the Czech economy as one of the worst economic performers among large Central Eastern European countries. Economic recovery in the Czech Republic is expected by Fitch for 2014.
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EU Ministers Move Closer To Bank Resolution Deal
European finance ministers on Tuesday took one step further in finalizing an agreement on a joint mechanism to deal with failing banks, despite visible divisions among member countries over the key measures of the plan.
Though the ministers failed to arrive at a precise agreement on Tuesday's meeting, they appeared keen to finalize the banking resolution plan before the EU leaders meeting on December 19-20.
"The Council adjusted its position in the light of negotiations with the European Parliament on proposed legislation harmonizing national rules on bank recovery and resolution and deposit guarantee schemes," the Ecofin said in a statement after the meeting.
Lithuania, which is holding the EU presidency, will work with the Parliament to reach an agreement on the bank recovery and resolution directive on December 11, according to the statement.
The proposed bank recovery and resolution directive is aimed at providing national authorities with common powers and instruments to pre-empt bank crises and to resolve any financial institution in an orderly manner in the event of failure, whilst preserving essential bank operations and minimizing taxpayers' exposure to losses.
The directive would require member states to set up ex-ante resolution funds to ensure that the resolution tools can be applied effectively.
The disagreements pertains mainly to the use of funds and the the number of financial institutions that should be brought under the new rule. There is also dispute over who should have the final say on closing down a troubled bank.
The ministers have proposed January 2016 as the starting date for the resolution mechanism, ahead of the originally planned 2018.
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Euro advances for 7th day vs dollar as short-term rates rise
The euro rose for a seventh straight session against the dollar on Wednesday, driven by a combination of higher money market rates and a growing belief that the European Central Bank will keep interest rates low for some time but not cut them.
Overnight lending rates have been creeping higher the last few sessions, as banks have paid back long-term funding lent by the ECB at the height of the euro zone debt crisis.
In addition, two-year swap rates have risen as the ECB has shown unwillingness to ease monetary policy despite low inflation.
Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, said higher short-term rates have indeed enhanced the appeal of the euro but noted that much of the euro's outperformance has been a function of investors reducing short positions.
Overall he said the euro zone still "faces a long road to recovery," citing recent weak economic data, particularly in France, the euro bloc's second-largest economy. French industrial output numbers released on Tuesday showed a decline for a second straight month.
In midday New York trading, the euro was up 0.2 percent against the dollar at $1.3794, after hitting a six-week high of $1.38. So far in 2013, the euro has gained 4.5 percent versus the greenback, on track for its best yearly gain since 2007.
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