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Euro Mixed Against Majors Amid German PPI.
The German PPI for December was released at 2:00 am ET. Amid the report, the euro showed mixed trading against other major currencies. While the euro gained against the franc, it fell against the dollar and the yen. Against the pound, the euro was little changed.
As of now, the euro is worth 1.4203 against the greenback, 129.43 versus the yen, 1.4744 versus the Swiss franc and 0.8709 versus the pound.
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The United Kingdom is scheduled to release public sector finance and money supply data on Thursday. The Flash Purchasing Managers' Index reports for major Eurozone economies are also due.
At 3:00 am ET, the Swiss central bank is scheduled to release money supply data for December. M3 money supply had increased 7.6% annually in November.
The release of the Flash Purchasing Managers' Index reports for major Eurozone economies is set to start at 3.00 am ET. The first one expected to hit the wires is the Flash French PMI for both manufacturing and service sectors. The manufacturing PMI is forecast to remain unchanged at 54.7 in January, while the services PMI is expected to rise to 59 from 58.7.
Thereafter, Flash German PMI data is due at 3.30am ET. Economists expect manufacturing PMI to climb to 52.9 from 52.7, while the services PMI is seen at 53, up from 52.7.
In the meantime, the Statistics Denmark is expected to release consumer sentiment data for January. The index is seen at minus 0.8, up from minus 3.6 in the preceding month.
Consumer sentiment data is also due from the Dutch statistical office, along with unemployment figures. Economists expect the jobless rate to edge up to 5.4% in the October to December period.
At 4:00 am ET, Eurozone's PMI report is also due. The manufacturing PMI is expected to stand at 51.9 compared to 51.6 in December, while the services PMI is forecast to rise to 53.8 from 53.7.
The U.K.'s money supply data is due from the Bank of England at 4:30 am ET. M4 money supply is forecast to rise by 8.9% on a yearly basis and by 0.9% on a monthly basis. The U.K.'s public finance report is also due at the same time. Public sector net cash requirement is seen at GBP 25.5 billion compared to GBP 14.7 billion in November.
Afterwards at 6:00 am ET, the Confederation of British Industry is set to release January's Distributive Trade Survey results.
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The dollar remained mixed versus other major currencies Thursday morning in New York, holding yesterday's gains versus the euro and yen while ceded a bit of ground against the sterling and loonie.
Traders were looking ahead to key data on the jobs situation and manufacturing sector, following Wednesday's decision by the Federal Reserve to maintain its key lending rate near zero.
The Labor Department is due to release its customary jobless claims report for the week ended January 23rd at 8:30 AM ET. Economists expect a decline in claims to 450,000. Lingering weakness in the jobs market compelled the Fed to reiterate it will keep rates at record low levels for an extended period yesterday.
The Commerce Department is set to release its durable goods orders report, which gives the value of orders placed for goods designed to last for more than 3 years, at 8:30 AM ET. Economists look forward to a 2% increase in durable goods orders for December.
The dollar leveled off versus the euro after hitting a fresh 5-month high of 1.3935 last night. Against the yen, the buck was steady at Y90.25, an improvement from a monthly low near Y89 set earlier in the week.
The number of unemployed in Germany rose in January, ending declines in past six consecutive months, as heavy snowfall and freezing temperatures hurt the country's labor market.
The seasonally adjusted number of unemployed increased by 6,000 month-on-month to 3.43 million in January. But, the increase was less than the expected 15,000. The rise in January follows a drop of 3,000 in the previous month.
Eurozone economic sentiment rose for the tenth successive month, a survey conducted by the European Commission showed Thursday. The economic confidence index stood at 95.7 in January, up from a revised reading of 94.1 in the previous month. The expected reading was 92.3.
Meanwhile, retail sales in Japan fell 0.3 percent on year in December, the Ministry of Economy, Trade and Industry said on Thursday. That missed forecasts for a 0.3 percent annual gain after the revised 1.1 percent contraction in November.
The dollar continued to show a lack of direction versus the sterling, easing to 1.6265. The pair has bounced back and forth between 1.6100 and 1.6300 for the past week.
With commodity prices stabilizing this morning, the dollar gave back some of its recent gains versus its Canadian counterpart, slipping a Canadian penny from yesterday's monthly high near C$1.0680.
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Eurozone inflation and unemployment rate rose less than expected, giving time to the central bank to pursue a gradual exit from stimulus measures.
Friday, the flash estimate from the Eurostat showed that consumer price inflation in the euro area edged up to 1% in January from 0.9% recorded in December. Economists had forecast the rate to rise to 1.2%. The statistical agency is set to release a final report on January inflation on February 26.
According to economists, the January increase was led by energy prices. However, the Eurozone inflation is much lower than the rates of nearly 3% in the U.K. and the U.S., due to a stronger euro.
"This increase is essentially due to energy prices, which are now clearly rising on a year-on-year basis," said ING economist Peter Vanden Houte. The economist expects headline inflation to move further moderately as the decline in food prices eases. However, underlying price pressures remain muted and this will allow the European Central Bank to wait-and-see until the fourth quarter of this year, he said.
In January, the ECB has kept its key interest rate unchanged at a record low of 1% for an eighth straight month. It aims to keep inflation below, but close to, 2% over the medium term. In view of the progressing economic recovery, the central bank have started removing some of its emergency measures as its policymakers feel such measures are not needed at the same extend it required at the height of the crisis.
According to Commerzbank's Rainer Guntermann, high overcapacities in the corporate sector and rising unemployment will also dampen the pressure on prices in the foreseeable future. The analyst said inflation is unlikely to change ECB's current monetary policy plans in the foreseeable future.
In a separate release, the statistical agency revealed that the seasonally adjusted jobless rate rose to 10% in December from a downwardly revised 9.9% in November. The current rate is the highest since August 1998. Economists were looking for a rate of 10.1%. The number of unemployed stood at 15.76 million in December, up from 15.67 million in November.
"Unemployment may now be close to a peak, but the rises seen over the last year could still bear down strongly on wage growth over the coming months, helping to keep inflation subdued," said Jonathan Loynes, chief European economist at Capital Economics. "The ECB has good reason to be more dovish than both the Fed and the Bank of England," he added.
The jobless rate for the EU27 edged up to 9.6% from 9.5%. Among the member states, the lowest unemployment rates were recorded in the Netherlands followed by Austria, while Latvia and Spain observed the highest rates.
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The recovery process in the Eurozone economy is likely to be uneven, European Central Bank President Jean-Claude Trichet said Thursday, after the central bank retained key interest rate at a record low of 1%.
In his introductory statement, Trichet said this outlook remains subject to uncertainty. The outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term, he added.
He noted that the the euro area has been benefiting from a turn in the inventory cycle and a recovery in exports, as well as from the significant macroeconomic stimulus under way and the measures adopted to restore the functioning of the financial system.
But, he asserted that these stimuli will unwind over time, while activity is likely to be adversely affected by the ongoing process of balance sheet adjustment in the financial and non-financial sectors, both inside and outside the euro area. Additionally, low capacity utilization rates are likely to dampen investment, and unemployment in the euro area is expected to increase somewhat further, thereby lowering consumption growth.
On prices, the central banker said inflation is expected to be around 1% in the near term and to remain moderate over the policy-relevant horizon. Trichet also said inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council's aim of keeping inflation rates below, but close to, 2% over the medium term.
He repeatedly urged banks to use the improved funding conditions to strengthen their capital bases further and, where necessary, take full advantage of government support measures for recapitalization.
Further, he pointed out that many euro area countries are faced with large, sharply rising fiscal imbalances. "It is of paramount importance that the stability programme of each euro area country clearly defines the fiscal exit and consolidation strategies for the period ahead," Trichet said. He urged countries to focus more on expenditure reforms.
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Friday, the Department of Statistics Malaysia announced that the trade surplus stood at MYR 12.1 billion in December, up from MYR 8.88 billion in November. This was the 146th consecutive month of trade surplus since November 1997. Economists expected a trade surplus of MYR 9.35 billion for December.
Exports increased 9.2% month-on-month to MYR 54.67 billion in December from MYR 50.07 billion in November. This was the highest monthly exports for 2009. At the same time, imports climbed 3.4% to MYR 42.58 billion.
On an annual basis, exports increased 18.7% in December, compared to the 3.3% fall in the previous month. Economists were looking for an increase of 12.5%. Meanwhile, imports grew 23.3% in December, faster than the 2.3% increase in November. Economists expected an increase of 21.5%.
In the fourth quarter, exports grew 10.6% sequentially to MYR 159 billion, while imports rose 8% to MYR126.55 billion. Year-on-year, exports and imports increased by 5.1% and 6.7%, respectively.
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German exports rose on an annual basis for the first time in fourteen months in December, data released by the Federal Statistical Office showed Tuesday. However, the year 2009 saw exports falling the most since 1950.
As global demand started picking up amid the economic recovery, German exports rose 3.4% year-on-year in December. That was the first rise since October 2008 and followed a 3.6% decline in November.
"Today's numbers highlight once again that the German economy can almost always rely on a helping hand from the export sector," said Carsten Brzeski, senior economist at ING Bank. "The road might be bumpy but it is the road to recovery and not a dead-end street."
On a monthly basis, exports continued to rise for a fourth month, with 3% rise in December. That was in contrast to a 0.1% drop economists had expected. In November, overseas sales grew 1.1%.
According to Commerzbank analyst Simon Junker, the trend in foreign trade is still clearly upwards and contributed positively to economic growth in the fourth quarter. In the coming months, the analyst expects exports to climb again, although the dynamics should slow down.
Suggesting that domestic demand is likely to recover in the near future, the pace of decline in imports slowed to 6.5% annually from 15.1% in November. Moreover, imports rose 4.5% month-on-month, the first rise in three months.
Colin Ellis, an economist at Daiwa Capital Markets Europe, said today's data could reflect some normalization in imports. The economist sees the German economic recovery to be disproportionately dependent on exports during 2010 amid subdued consumer spending.
The trade surplus in December was EUR 13.5 billion, down from EUR 17.2 billion excess in November. Provisional results of the Deutsche Bundesbank showed a current account surplus of EUR 20.6 billion for December, up from EUR 17.8 billion surplus in the previous month.
Further, Destatis reported that Germany exported commodities to the value of EUR 803.2 billion in 2009, down 18.4% over 2008. Similarly, imports dropped 17.2% to EUR 667.1 billion. The statistical office said it was the biggest decline recorded in foreign trade in relation to both imports and exports since 1950.
The foreign trade balance showed a surplus of EUR 136.1 billion in 2009, narrower than the EUR 178.3 billion in the previous year. The current account surplus during the period was EUR 119.4 billion, smaller than EUR 165.2 billion surplus logged in 2008.
"As regards the world's top exporting nations, Germany as the largest exporter was overtaken by China in 2009," Destatis said. Citing information from the Chinese Ministry of Commerce, Destatis said Chinese exports amounted to US$1,201.7 billion, while German exports totaled US$1,121.3 billion in 2009.
Also on Tuesday, the statistical office confirmed January's consumer price inflation at 0.8%, slightly down from 0.9% recorded in December.
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The euro lost ground against most of its major counterparts during European session on Thursday.
Against the British currency, the euro slipped to 0.8759 at 9:00 am ET, down from a new multi-week high of 0.8844 hit at 4:15 am ET. The current quote for the euro-pound pair is 0.8761, compared to yesterday's close of 0.8811.
The euro traded in a tight range against the Swiss franc. As of now, the euro-franc pair is trading near yesterday's close of 1.4666.
The euro lost ground against the U.S. dollar. At 9:00 am ET, the euro fell to 1.3653 against the U.S. currency. As of now, the euro is worth 1.3669 against the U.S. dollar. The euro-greenback pair closed yesterday's trading at 1.3734.
The euro showed a downtrend against the Japanese currency as well. At 9:10 am ET, the euro declined to 122.49 versus the yen. At present, the euro is trading at 122.72 versus the yen, compared to yesterday's close of 123.61.
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Risk averse traders continued to flock to the relative safety of the dollar on Friday, with the world's de facto reserve currency enjoying a solid bid amid growing speculation the steam has run out of the global recovery.
The buck hit a fresh 9-month high again the euro, which has been hammered amid concerns that Greek debt problems will spread to other fragile economies without meaningful intervention on the part of more stable euro area nations.
However, with the eurozone struggling with anemic economic growth, major economies may be hesitant to drastically boost spending in order to prevent the Greek contagion.
European officials offered vague promises to support Greece on Thursday, and are expected to detail an aid package sometime next week.
Meanwhile, encouraging US retails sales data was overshadowed by news that China is engineering a soft slowdown of its economy.
A report from the Commerce Department on Friday showed that retail sales increased by 0.5 percent in January following a revised 0.1 percent decrease in December.
Adding to worries about the sustainability of the global recovery, China, now the engine of global growth, hiked its reserve requirement on banks in order to stem lending.
Even with the Dow taking back most of a 160 point drop in early dealing, the dollar sustained most of its gains against the euro.
The dollar rose to 1.3531 versus the euro, its highest level since last May, then backed off a penny to 1.3650.
At the same time, the buck extended this week's run of choppy trading versus the sterling, bouncing back and forth near 1.5600. The buck touched an 8-month high of 1.5533 a week ago, but has since risen no further.
The dollar also remained directionless against the yen, hanging around the Y90 mark.
The eurozone continued to lag behind the global economic recovery in the fourth quarter of 2009. Gross domestic product across the eurozone grew by only 0.1% in the fourth quarter compared to the previous three-month period.
The German economy, Europe's largest, unexpectedly stagnated in the fourth quarter as final consumption expenditure and investment failed to support growth.
Better-than-forecast French growth figures may have prevented the eurozone economy from sliding back into contraction mode.
Greece, saw its output shrink by 0.8% in the fourth quarter, casting doubts about the Greek public's willingness to accept cost cutting measures aimed at getting the nation's debt under control.
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The euro traded mixed against other major currencies during early European deals on Monday. The euro pared its recent gains against the pound and the franc, but declined against the yen. However, the euro recovered its recent losses against the U.S. dollar.
European stocks rose today in early trade, with banks and commodity stocks taking the lead as investors awaited the euro zone finance ministers meeting.
In early deals, Germany's DAX climbed 0.5%, France's CAC-40 index jumped 0.8% and U.K.'s FTSE 100 index rose 0.7%.
The euro pared its recent gains against the pound during early European session on Monday. The euro slipped to 0.8673 at 4:00 am ET, moving down from 0.8705 hit earlier. Presently, The euro-pound pair is trading near Fridays' New York session close of 0.8674.
The euro lost some its late Asian session gains versus the Swiss currency during early European deals on Monday. Moving down from a high of 1.4681 touched at 12:55 am ET, the euro reached a low of 1.4655 at 4:30 am ET. As of now, the euro is trading at 1.4656 against the franc, compared to Friday's New York session close of 1.4666.
On Monday, against the yen, the euro extended its Asian session's downtrend during early European deals. At 4:30 am ET, the euro fell to 122.43 against the yen. The current quote for the euro-yen pair is 122.45, compared to Friday's close of 122.67.
The euro recovered its recent losses against the U.S. dollar during early European deals on Monday. The euro drifted higher to 1.3610 at 4:15 am ET, moving up from 1.3594 hit earlier. As of now, the euro is worth 1.3608 against the greenback, compared to Friday's close of 1.3623.
The U.S. financial markets are closed today in observance of Presidents Day.
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