Eur/usd - page 67
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EUR/USD weekly outlook: February 10 - 14
The euro rose against the dollar on Friday after data showed that the U.S. economy added fewer-than-expected jobs last month, but the data did little to alter expectations that the Federal Reserve will continue to scale back its stimulus program.
EUR/USD rose to 1.3642, the highest level since January 30 and was last up 0.32% to 1.3634. For the week, the pair gained 0.83%.
The pair is likely to find support at 1.3551, Friday’s low and resistance at 1.3700.
The dollar slid after the Department of Labor said the U.S. economy added 113,000 jobs in January, well below expectations for jobs growth of 185,000, after December's lackluster gain of 75,000 jobs.
It was the weakest two-month stretch of job creation in three years as inclement weather contributed to a slowdown in hiring.
Yet the report also showed that the number of people participating in the labor force edged up to 63% from a 30-year low of 62.8% last month, while the unemployment rate unexpectedly ticked down to a five year low 6.6% from 6.7% in December.
The report was seen as unlikely to derail reductions in the Fed’s stimulus program. The bank announced a second $10 billion cut to its asset purchase program in January, reducing it to $65 billion-per-month.
The euro briefly dipped lower against the dollar earlier Friday after Germany's constitutional Court ruled that the European Central Bank’s bond-buying program may exceed its mandate, and referred it to European Court of Justice.
Following the ruling, the ECB reiterated that its bond purchasing program does not breach European rules and falls within its mandate.
read more
Italy's Industrial Production Falls For First Time In 4 Months
Italy's industrial production declined for the first time in four months in December, data from the statistical office Istat showed Monday.
Industrial output fell 0.9 percent month-on-month, reversing the 0.3 percent rise in November. This was the first fall since August 2013, when output fell 0.1 percent.
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EUR/USD holds steady in subdued trade
The euro held steady against the U.S. dollar in subdued trade on Monday, as investors remained cautious ahead of Federal Reserve Chairman Janet Yellen's testimony on the bank’s semiannual monetary policy report later in the week.
EUR/USD hit 1.3651 during European afternoon trade, the pair's highest since January 30; the pair subsequently consolidated at 1.3636, inching up 0.01%.
The pair was likely to find support at 1.3583, the low of January 16 and resistance at 1.3688, the high of January 28.
The dollar remained under pressure after the Labor Department on Friday said the U.S. economy added 113,000 jobs in January, well below expectations for 185,000 new jobs, as inclement weather contributed to the slowdown in hiring.
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Bank Of France Sees Slower Growth In Q1
The French economy is set to grow at a slower pace at the start of the year, survey data from the Bank of France suggested Monday.
Gross domestic product is forecast to expand 0.2 percent in the first quarter of 2014, which is slower than the fourth quarter's estimated growth of 0.5 percent.
According to monthly survey report, business confidence in manufacturing remained unchanged at 99 in January. Meanwhile, confidence in services rose slightly to 94 from 93 in December.
read more
Sweden Jobless Rate Falls In January
Sweden's jobless rate declined in January reflecting a decrease in unemployment among young people, the Public Employment Service said Tuesday.
The unemployment rate fell to 4.6 percent in January from 4.8 percent a year ago. The youth unemployment rate was 16.6 percent, down by 1.6 percentage points since January last year.
Nearly 412,000 people were registered as unemployed in late January, which was down by around 11,000 from a year ago, the agency said.
source
ECB Considering Negative Deposit Rate
The European Central Bank is "seriously" considering taking its rate on overnight bank deposits into negative territory, a top member of its executive board said Wednesday, adding to mounting speculation that the central bank will act at its next policy meeting to keep the tepid euro-zone economy on track.
"[Negative rates] is something we are considering very seriously," Benoît Coeuré, ECB executive board member, told news agency Reuters in an interview, adding that it is "a very possible option."
The ECB confirmed Mr. Coeure's remarks.
Such a measure could help to kick-start the flow of bank credit to households and businesses by penalizing banks for parking their excess funds at the central bank instead of lending them to other banks in the financial markets.
The euro zone relies heavily on bank lending to finance spending, investment and hiring, but the financial crisis and a lengthy recession that ended in the spring of 2013 saddled bank balance sheets with bad loans. Lending by euro-zone banks to households and businesses slumped 2.3% in December, matching the steepest drop in two decades.
However, Mr. Coeure down-played the effect such a measure would have on the euro-zone economy. "You should not expect too much of it," he said.
His comments drove the euro down around 0.5% against the dollar to hit the day's low of $1.3564. The single currency was also down around 0.9% against the pound, as Mr. Coeure's comments, combined with the Bank of England's decision to raise the U.K's economic growth forecasts, weighed on the euro. Most recently the euro was trading at $1.3577 and at £0.8212.
The central bank has paid no interest on bank deposits since mid-2012, when it lowered the deposit rate to zero. The ECB has said for many months that making the rate negative—which would be the first time a major central bank has done so—was an option.
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U.S. Retail Sales, Initial Jobless Claims
WHAT TO WATC H: U.S. retail sales probably stagnated in
January after a 0.2 percent climb in December, 8.30 a.m. U.S.
initial jobless claims probably fell to 330,000 for the week
ended Feb. 8, 8.30 a.m. U.S. continuing claims, 8.30 a.m. The
Chinese government is targeting export growth of about 7.5
percent in 2014, three people with direct knowledge of the matter said. Investor bets for
the Bank of England’s key rate to increase next year from a record low are reasonable,
Bank of England Chief Economist Spencer Dale said. Australia’s unemployment rate
climbed to the highest level in more than 10 years in January.
■■ECONOMICS: Oil inventories in advanced economies tumbled in the fourth quarter
by the most since 1999. India’s consumer-price growth eased more than analysts estimated
in January. U.K. house-price growth eased in January.
■■ GOVERNMENT : U.S. Secretary of State John Kerry is heading to Asia for a threenation
visit where he will pressure China to restrain its maritime claims and do more to
rein in North Korea’s nuclear ambitions.
■■COMPANIES: Comcast Corp. agreed to acquire Time Warner Cable Inc. for about
$44 billion, combining the largest two U.S. cable companies in an all-stock deal, according
to four people familiar with the matter.
■■MARKETS: European stocks fell, halting their longest rally this year. Gold traded
near the highest level in three months.
Mario Draghi: Financial Integration and Banking Union
Banking union will create more sustainable financial integration
Speech by Mario Draghi, President of the ECB,
at the conference for the 20th anniversary of the establishment of the European Monetary Institute,
Brussels, 12 February 2014
A banking union will contribute to more sustainable financial integration in the euro area, says ECB President Mario Draghi. Speaking at a conference celebrating the 20th anniversary of the European Monetary Institute in Brussels, Draghi explains how stronger supervision, cross-border banking integration and resolution frameworks can reduce the risk of financial fragmentation. It was that kind of fragmentation which contributed to the recent financial crisis.
Draghi explains that financial integration is necessary for an effective monetary union. But “the euro area did not succeed in achieving sustainable financial integration”, the ECB’s President says. “And we can see the importance of financial integration all the more in its absence.”
According to Draghi, financial integration before the crisis was incomplete. While the interbank market was fully integrated, retail banking remained fragmented. That led to a situation where banks used short-term and debt-based funding to increase lending to favoured domestic sectors such as real estate. “As banks’ assets were not well allocated, nor well diversified geographically, they were more vulnerable to domestic shocks. And as their foreign liabilities were mainly interbank, they could not share the subsequent losses with other jurisdictions.” So when the crisis hit, the cost of repairing balance sheets fell largely on their domestic fiscal authorities. “The result was the infamous bank sovereign nexus”, Draghi says.
A banking union will generate a higher quality of financial integration. The Single Supervisory Mechanism will enable supervisors to mitigate the possible destabilising effects of financial integration. It will also help to maximise the benefits of integration by creating a policy framework more conducive to cross-border banking. If problems still occur, the planned European resolution framework will help by improving private risk-sharing while insulating sovereigns. To reach that aim, Draghi makes a case to improve the design of the Single Resolution Mechanism and the Single Resolution Fund. The proposed ten-year period to mutualise national compartments into a single fund “creates uncertainty”, the President says. “We would see merits in doubling the pace of mutualisation to have a genuine European fund within five years.”
full speech
ECB survey sees lower eurozone inflation in 2014, 2015
Eurozone inflation will remain below target in the next few years, and growth will speed up, a survey by the European Central Bank forecast on Thursday.
In its regular quarterly survey of professional forecasters, the ECB found that inflation in the 17 countries that share the euro was expected to reach an annual average 1.1 percent this year.
Inflation would then pick up to 1.4 percent in 2015 and 1.7 percent in 2016, the ECB said.
The new forecasts mark a noticeable downward revision from previous predictions.
At the time of its last SPF survey in November, forecasters had been pencilling in inflation of 1.5 percent for this year and 1.6 percent next year.
The ECB defines price stability as inflation rates close to but just below 2.0 percent.
The respondents in the survey attributed the subdued inflation outlook to "surprises in recent data."
"More generally, respondents cited lower commodity prices, the appreciation of the euro and weakness in the economic situation and labour markets as factors behind their revisions," the ECB explained.
Over the longer term, the rate of inflation could reach 1.9 percent, the survey found.
Last week, the ECB held its key "refi" refinancing rate steady at its current all-time low of 0.25 percent in face of extremely low inflation in the euro area.
ECB chief Mario Draghi has insisted, however, that there is no threat of deflation -- a vicious circle of falling prices -- in the region.
Turning to the growth outlook, the SPF survey predicted that area-wide gross domestic product (GDP) would return to growth of 1.0 percent in 2014 and 1.5 percent in 2015 after contracting last year.
Momentum would pick up to growth of 1.7 percent in 2016 and 1.8 percent in the longer term, the ECB survey found.
That confirms previous forecasts and "implies an expectation of a continuous but gradual strengthening in economic activity over the years ahead," the ECB said.
"The qualitative comments provided by the respondents indicate that an ongoing, but measured, pick-up in domestic demand is expected," it added.
source
French, German GDP up in final quarter of 2013
French and German economies grew in the fourth quarter of 2013, according to data released Friday. French data met expectations of analysts polled by Dow Jones Newswires. Compared to the prior quarter, French gross domestic product rose 0.3%, which was a rebound from a contraction in September. In Germany, the final quarter saw growth of 0.4%, which was slightly over expectations for growth of 0.3%.