Eur/usd - page 9
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German Business Confidence Seen Rising on Growth Signs
German business confidence probably rose for a third month in July, indicating that Europe’s largest economy is recovering as the 17-nation euro region tries to shake off its longest-ever recession.
The Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 106.1 from 105.9 in June, according to the median of 45 forecasts in a Bloomberg News survey. (GRIFPBUS) A measure of current conditions also gained, while a gauge of expectations was unchanged, the survey shows.
German unemployment unexpectedly declined in June and the nation led the first expansion in euro-area manufacturing in two years in July. The Bundesbank said this week that the domestic economy grew “strongly” in the second quarter, while warning of signs of a slowdown in coming months.
“There might be the one or more potholes on the road, but in general the German economy is moving in the right direction,” said Mario Gruppe, an economist at NordLB in Hanover. “For the euro area, there’s hope that the economy emerged from recession in the second quarter or at least flirted with stagnation.”
Manufacturing in the euro area, Germany’s biggest trading partner, unexpectedly expanded this month for the first time since July 2011, according to a survey of purchasing managers published yesterday by London-based Markit Economics. That lends support to European Central Bank President Mario Draghi’s prediction of an economic recovery later in 2013.
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I am looking to go long today. Will watch price action on support levels
Spain's jobless rate falls for first time in two years
Spain's unemployment rate has fallen for the first time in two years, according to official figures.
The rate stood at 26.3% in the second quarter of the year, down from a record 27.2% in the first quarter.
The National Statistics Institute said the total number of unemployed had fallen to just below six million.
But the unemployment rate remains one of the highest in the EU with the Spanish economy still mired in an 18-month recession.
A strong tourist season was credited with boosting employment, with tourism accounting for about 10% of Spanish GDP.
The news will be welcomed by the government of Prime Minister Mariano Rajoy, which has continued to implement austerity reforms but argued the recession will soon be over.
On Tuesday, Spain's central bank estimated that the economy shrank again between the first and second quarter of this year, but by only 0.1%, raising hopes that the economy will begin growing again by the end of the year.
The fall in the unemployment rate came as surprise to some. Economists surveyed by Reuters had forecast another rise.
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EUR/USD hits session highs after U.S. data
The euro rose to session highs against the dollar on Thursday, following the release of mixed U.S. data on initial jobless claims and durable goods orders.
EUR/USD hit 1.3239 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.3225, gaining 0.20%.
The pair was likely to find support at 1.3133, the low of July 22 and resistance at 1.3255, Wednesday’s high and a five-week high.
The Labor Department said the number of individuals filing for initial jobless benefits last week increased by 7,000 to a seasonally adjusted 343,000, compared to expectations for an increase of 6,000 to 340,000.
The Commerce Department said orders for long lasting manufactured goods rose by a seasonally adjusted 4.2% in June, compared to expectations for an increase of 1.3%.
Durable goods for May were revised to a 5.2% gain from a previously reported 3.7% increase.
Core durable goods orders, which exclude volatile transportation items, were flat in June, compared to expectations for a 0.5% increase.
Data release earlier Thursday showed that the Ifo index of German business climate ticked up to 106.2 in July from 105.9 In June, better than expectations for a reading of 106.1.
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Watching price action near 1.3270-1.3305
ECB will soon need to help France: Juergen Stark
The euro zone debt crisis will flare up again towards the end of this Fall, former European Central Bank chief economist Juergen Stark told German daily Handelsblatt on Friday, warning that a new phase of crisis management is upon us.
One year after ECB President Mario Draghi said he would do"whatever it takes" to keep the euro intact, Stark said he feared the bank would soon need to support France by purchasing its government bonds.
Stark said the bond buying program is expected to be called into action for heavily-indebted countries such as Italy and Spain. "But pressure will mount for the instrument to be used in France as well," Stark told Handelsblatt. The bank could even come under pressure to activate the program without it being attached to a strict program of fiscal reforms.
That contrasts with Draghi's insistence that any bond purchases will be dependent on strict adherence to such a program.
Stark was a key figure at the ECB and his resignation in 2011 – rumored to be over disagreement over ECB buyingof government bonds – surprised many. The ECB started buying government bonds in May 2010 after agreeing to support emergency loans for Greece.
Stark conceded that Draghi's "whatever it takes" speech in London had calmed financial markets. "But I doubt it is a lasting calm," he said.
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EUR/USD holds steady in thin trade
The euro held steady against the U.S. dollar in thin trade on Friday, as investors remained cautious ahead of the release of U.S. consumer sentiment data later in the day, amid uncertainty over the future of the Federal Reserve's stimulus program.
EUR/USD hit 1.3260 during European afternoon trade, the session low; the pair subsequently consolidated at 1.3268, easing 0.07%.
The pair was likely to find support at 1.3177, the low of July 24 and resistance at 1.3318, the high of June 11.
Markets were jittery after the release of mixed U.S. data on initial jobless claims and durable goods orders on Thursday fuelled uncertainty over whether the Fed will start to scale back its bond buying program later this year.
The Labor Department said the number of individuals filing for initial jobless benefits last week increased by 7,000 to a seasonally adjusted 343,000, compared to expectations for an increase of 6,000 to 340,000.
The Commerce Department said orders for long lasting manufactured goods rose by a seasonally adjusted 4.2% in June, compared to expectations for an increase of 1.3%.
Durable goods for May were revised to a 5.2% gain from a previously reported 3.7% increase.
Core durable goods orders, which exclude volatile transportation items, were flat in June, compared to expectations for a 0.5% increase.
The euro was lower against the pound with EUR/GBP shedding 0.25%, to hit 0.8610.
Later in the day, the U.S. was to produce revised data on consumer sentiment from the University of Michigan.
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Greece Set To Gain Access To EUR 2.5 Bln Aid Tranche On Monday
Eurozone finance ministers approved the payment of next aid tranche to Greece, at a conference call on Friday, after the nation met the conditions set by lenders.
The installment of EUR 2.5 billion will be disbursed on Monday subject to the completion of national approval procedures. The German parliament committee will meet on Monday to clear its portion of contribution.
Greece will also receive EUR 1.5 billion, the profits that the European Central Bank made from the sale of Greek debt.
On Thursday, Greece lawmakers passed the final piece of legislation required to unlock the aid. The parliament passed a new tax procedure code and decided to arrange transfers to the reserve for 4,250 civil servants.
Further, the International Monetary Fund is likely to approve a separate EUR 1.8 billion loan on Monday.
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Greek funding hole of nearly four bn euros 'not enormous': EU source
Twice bailed-out Greece still faces a funding shortfall of some 3.8 billion euros ($5.0 billion) late next year but its troika of international creditors are not overly concerned, a senior EU official said Friday.
"There is a programme financing gap of about 3.8 billion to the end of 2014," the European Union source said, adding that in the eyes of the experts involved, this figure was "not enormous."
The Greek bailouts agreed by the EU, the European Central Bank and the International Monetary Fund are financed through to mid-2014, the official said.
There have been reports that the rescue faced a shortfall of as much as 10 billion euros and this is the first time an EU official has given an indicative figure of how much might be needed.
Earlier Friday, the 18-nation eurozone gave the green light for the release of another 4.0 billion euros in bailout funds for Greece after it met programme conditions.
Simon O'Connor, spokesman for EU Economic Affairs Commissioner Olli Rehn, said that all the conditions required of Athens in the shape of austerity and civil service cuts "have been successfully completed."
Greece was first bailed out for 110 billion euros in 2010 but when that failed, got a second rescue worth 130 billion euros plus a private sector debt write-off totalling more than 100 billion euros.
In exchange, Athens has had to implement draconian austerity measures, including drastic cuts to pensions and civil service payrolls while the economy has remained stuck in recession for some six years.
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Hungary Will Repay IMF Loan Ahead Of Schedule, PM Says
Hungary will pay back its loan in the course of summer, which was taken to rescue the economy from a risk of bankruptcy during the financial crisis, Prime Minister Viktor Orban reportedly said Saturday.
The nation availed the loan from the International Monetary Fund and the EU during 2008-09. The borrowing of more than EUR 2 billion will mature in 2013, and the rest of the loan next year.
Orban said he has directed the Economy Minister to make arrangement to prepay the entire amount this summer, ahead of the schedule.
Earlier in July, Hungary's central bank called on the IMF to shut its local office in Budapest. The government is set to seek re-election next year.
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