Poor little guy! The euro chalked up another losing day against the Greenback and the yen, extending its losing streak to four days. EUR/USD closed the week at 1.4196 while EUR/JPY ended at 109.05.
As always, concerns about euro zone finances weighed down the shared currency the entire day and it didn’t help that risk aversion loomed over the markets then. Euro zone also printed weaker than expected PPI data on Friday, with producer prices showing a mere 0.5% uptick instead of the expected 0.6% increase.
It seemed that the euro selloff couldn’t possibly get any worse… but it did! The U.S. printed an extremely disappointing NFP figure, boosting demand for safe-havens even more. Make sure you check out my U.S. economic commentary to read about the nitty gritty of the NFP.
Brace yourselves for the release of euro zone retail sales data at 9:00 am GMT today. The report is expected to show that consumer spending was up by a mere 0.1% in July, lower than the previously seen 0.7% increase in June. Weaker than expected results could trigger another round of euro selling, extending EUR/USD’s and EUR/JPY’s losing streak for yet another day.
For the next couple of days, Germany will dominate the airwaves since it will release its factory orders data and industrial production figures on Tuesday and Wednesday respectively. Let’s see if euro zone’s largest economy could provide some hope for the euro!
Thursday is gonna be a big day for the euro since the ECB is set to announce its monetary policy decision then. Keep your eyes and ears peeled for any comments regarding the fiscal state of the region and how the central bank plans to keep its finances in order. From what I heard, a shadow council is urging the ECB to cut rates again to prevent the region from slipping back to recession. If that happens, make way for a huge euro selloff!
Despite most U.S. traders out on holiday celebrating Labor Day yesterday, the bears were still strong enough to take the euro lower. It appeared that the market remains risk averse as financial worries continued to linger in the euro zone. EUR/USD ended the U.S. trading session at 1.4094, a good 66 pips lower from its opening during the Asian session.
Over the weekend, in response to the European Union’s warning that Italy was doing too little to support growth, ECB President Jean-Claude Trichet mentioned that Italy should follow-through with their planned austerity measures. This spurred speculation that the ECB might stop buying Italian bonds. In addition, an IMF official was caught saying that Greece would likely end up defaulting some time in the next six months.
On the economic front, the euro zone retail sales report came in positively. It printed a 0.2% increase, slightly higher than the 0.1% forecast.
Today, the euro zone’s economic calendar only has the German Factory Orders for us. The report is scheduled to come out at 10:00 am GMT and is expected to show a 1.4% decrease. Let’s see if the report is able to beat forecast and provide some much-needed support for the euro.
Look out beloooooow!!! Even though the Swiss National Bank put its foot down on EUR/CHF price action, the euro still lost against the Greenback, another safe haven. With all the hoopla going on in the euro zone, who could blame investors for wanting to short the euro?
The biggest news yesterday came from the SNB when it announced that it would intervene as often as it needs to in order to prevent the franc from rising further in markets. As a result, EUR/CHF jumped by 1,160 pips in three hours!
Still, this doesn’t mean that concerns in the euro region also magically disappeared like EUR/CHF’s losses. In fact, the euro still fell heavily against the dollar, which signaled that investors haven’t really forgotten the bad state the euro zone economy is in.
Just yesterday the region’s revised GDP clocked in at an expected 0.2% growth in the second quarter, but Germany’s factory orders missed expectations with a 2.8% decline when markets were only expecting a 1.4% fall.
And then, of course, there are also concerns on the euro economies themselves. Word on the street is that Italy is still on the hot seat for a credit rating downgrade after its government watered down its austerity measures. In addition, markets will also be watching the German high court’s voting on bailouts today. If the court decides against the legality of Germany’s participation in the euro zone bailouts, then we might see the euro sink deeper in hot water.
Only the German industrial production at 10:00 am GMT is scheduled for release today, so make sure you keep your eyes peeled for any other news reports that might rock the euro!
“Hold up, wait a minute, let me get some pips up in it!” The euro finally put an end to its 6-day losing streak and won a victory over the dollar. With positive economic data and good news from Italy and Germany backing its rise, EUR/USD rose 97 pips to finish at the 1.4100 major psychological handle.
Finally, some good news for the euro! Germany’s top court decided to say “No way!” and wag its finger at calls to block the country’s participation in the euro zone bailouts. This helped ease investor fears a bit as it suggests that the euro zone may finally proceed peacefully with addressing its debt problems.
Italy dealt its own bit of good news when it announced that Prime Minister Berlusconi’s austerity package was passed. Of course, we all know that the package was designed to help tame Italy’s ballooning debt. That the package was passed and is now in the hands of the Lower House means that Italy is one step closer to getting something done about its debt situation. Let’s hope we get real results out of this!
On the economic data front, we saw German industrial production demolish forecasts for a 0.6% increase in production. Instead, the euro zone powerhouse posted a growth of 4.0%, its strongest in over a year as late school holidays beefed up factory output. Though the ministry believes the surge in production in July was a bit “exaggerated” due to fewer school holidays, it feels quite optimistic about the future and believes the outlook for production is positive.
I wonder if ECB President Trichet will mirror that sentiment when he announces the ECB rate decision at 11:45 am GMT. But chances are, we won’t hear anything new or market-shaking from Trichet this time around. He’s only two meetings away from leaving the central bank, and many believe it’s unlikely that he’ll stir things up before then. Besides, it seems that there hasn’t been many calls for the ECB to act as of late. In any case, be sure to catch the rate decision (11:45 am GMT) and the press conference (12:30 pm GMT)!
Boy, did the euro bulls have a bad day yesterday! As soon as EUR/USD opened at 1.4104, it was all downhill for the shared currency. The pair traded straight down all the way to its closing price at 1.3890. Against the yen, the euro lost 137 pips as EUR/JPY ended the day at 107.62.
As it turns out, ECB President Trichet had a little surprise up his sleeves yesterday. Too bad for the euro bulls, the central bank head honcho didn’t bring good news. He hinted that the bank was more concerned with slowing growth and the high level of uncertainty in the market more than the risks posed by inflation. Consequently, his remarks dashed all hopes of an interest hike in the next few months.
To make things even worse, the ECB downwardly revised its GDP forecast. Economic growth in 2011 was initially expected to be somewhere between 1.5% and 2.3%. But now, the GDP is only anticipated to come in between 1.4% and 1.8%. Yikes!
Save for the French industrial production report due at 6:45 am GMT, we don’t have any other high-caliber event on tap for the euro today. Maybe if the report prints a figure better than the 0.4% forecast we’ll see the euro take a breather from the bears’ advances so make sure you ain’t snoozing during the release!
EUR/USD gapped lower over the weekend again as euro zone debt concerns continued to bother the euro. This forced the pair to drop by roughly 500 pips from its 1.4160 weekly open price and close at 1.3662 at the end of the week. EUR/JPY also had a terrible week as it plummeted from a high of 109.95 to a low of 105.30. Is the euro in for another round of losses this time?
The only economic report released from the euro zone last Friday was the French industrial production figure, which came in better than expected and printed a 1.5% jump. However, this wasn’t enough to suppress the negative vibes spurred by ECB Executive Board member Stark’s resignation. No, I’m not talking about Tony Stark here, nor am I referring to any of the Stark family in the Game of Thrones. Jϋrgen Stark, who is considered by many as the central bank’s chief economist, tendered his resignation last week for personal reasons. My buddy Forex Gump suggested that Stark resigned because he had enough of the ECB’s buying of government bonds from debt-ridden economies, causing many to worry that the euro zone is in deeper trouble than they originally thought.
It’s a pity that Stark was also one of the more hawkish members of the ECB. Without him, the central bank could more likely give in to looser monetary policy now that there’s one less guy to push for tightening measures. There must always be a Stark in ECB!
There aren’t a lot of economic reports due from the euro zone this week, save for the industrial production report and the CPI figures due Wednesday and Thursday respectively. This means that the markets could focus on the state of the euro zone debt crisis, and whether Greece would really need yet another bailout package. Stay on your toes if you’re trading the euro pairs, fellas!
Just when it looked like the euro was headed for another round of losses, it recovered in spectacular fashion. After touching the 1.3500 handle, EUR/USD bounced back higher during the London session to nearly test the 1.3700 mark. By the end of the day, the pair had closed at 1.3659, up 56 pips from its opening price.
Despite the euro’s recovering, there is still a lot of turmoil weighing down the shared currency. Concerns of a Greek default, rising Italian yields, and potential downgrades of French banks are all monkeys on the euro’s back right now and should keep it from making any significant gains.
For today, we’ve got French CPI data on deck at 5:30 am GMT. Expectations are that prices rose by 0.3% in August. Take note that the monthly CPI report from Germany came in flat. If we were to see the same from France, it would give incoming ECB President Mario Draghi even less reason to raise interest rates.
Also, we’ve got another Italian bond auction scheduled during the London session. If we start to see Italian bond yields rise, it could trigger a wave of risk aversion and a euro sell-off may not be far behind!
With all that’s going on in the euro zone, it’s surprising that the euro managed to score a gain against the Greenback yesterday. EUR/USD opened at 1.3664, dipped to a low of 1.3558, then managed to close 6 pips shy of the 1.3700 handle. EUR/JPY didn’t fare so well as it ended 30 pips below its 105.61 open price.
Fears of a Greek default and debt contagion loomed over the markets yesterday, with Italian bond yields rising from 4.93% in July to 5.6% in August. This means that demand for their bonds is dwindling and that investors are requiring a higher rate of return on their Italian bond holdings. However, the euro managed to hold its ground when German Chancellor Angela Merkel expressed optimism that the European leaders could keep the debt crisis contained.
The euro also got a boost from news that China was planning to pitch in and help European countries struggling with debt problems. Rumor has it that China is thinking of investing in Italy, saying that Europe is too important to fail. Keep your eyes and ears open for any updates regarding China’s possible role in the debt crisis because it could have a huge impact on the euro’s movement.
On the economic front, only the industrial production report is due from the euro zone today. This could show that industrial production rose by 1.5% in July, making up for the 0.7% drop seen last June. The report is expected to have a mild impact on the euro’s price action, but stronger than expected figures could provide support.
This bad boy’s certainly on a roll, isn’t it? Though the markets remain focused on Europe’s sovereign debt woes, the euro managed to pull off another victory against the dollar. Actually, it recorded its third straight uptick as it rose 58 pips against the USD! Will it continue its winning streak today?
Finally, a bit of good news from the euro zone! Greek Prime Minister George Papandreou, German Chancellor Angela Merkel, and French President Nicolas Sarkozy gave a joint statement yesterday voicing their support for Greece. Ahhh… Don’t you just love it when these guys get along? The fact that these head honchos aren’t looking to boot Greece out of the euro zone boosted confidence that Greece will be allowed to receive its next bailout from the EU/IMF to avoid default.
Unfortunately, yesterday’s lone economic report wasn’t as upbeat. According to the latest industrial production data, output was up by only 1.0% in July, which is 0.5% less than expected. Being the economic snoop that I am, I did a little investigation and found out that capital goods led the way with a 3.0% increase while non-durable consumer goods lagged behind with a 0.6% decline.
Today, we have a couple of tier 2 reports rolling out of the euro zone. At 8:00 am GMT, the ECB will publish its monthly bulletin. Though we probably won’t read anything that we haven’t already read before, you might be interested in catching this report for further details on the status of the euro zone economy.
After that, prepare to feast your eyes on euro zone CPI data at 9:00 am GMT. Forecasts say we should expect to see CPI remain steady at 2.5% and core CPI at 1.2%. This time around, we might not get much volatility even if this report does print above forecast as the ECB didn’t seem too concerned about inflationary pressures the last time it held its press conference.
What a lucky break! Thanks to some good news from the euro zone, EUR/USD was able to close more than a hundred pips up from its 1.3552 open price. EUR/JPY also ended the day in positive territory as it closed 38 pips above the 106.00 handle. Is this a mere retracement or reversal we’re seeing?
For the past few days, the prospect of a Greek default has been weighing down the euro as traders worried about debt contagion. But before things could get any worse, central bankers decided to join hands and come up with a coordinated effort to keep the debt situation from boiling over. The Fed, BOJ, and SNB plan to conduct liquidity providing operations, which would enable European banks to borrow in dollars for the next three months. With that, tight borrowing conditions should be the least of their worries… at least until the end of this year.
With the ECOFIN meetings set to start today, we might be in for more coordinated solutions from European finance officials. Bear in mind that U.S. Treasury Secretary Geithner is going to participate in the meetings, suggesting that the U.S. is determined to help out. Make sure you keep your eyes and ears peeled on any updates because, if more countries join Germany and France in pledging to help Greece out, the euro could be in for more gains.
Oh, and if you want to trade the news, you might want to stay tuned for the release of euro zone’s current account balance. Their deficit is expected to narrow from 7.4 billion EUR to 5.6 billion EUR for July, and a smaller than expected deficit could boost the euro.
There goes the euro’s clean sheet! After rising four straight days against the Greenback, the shared currency took a trip downtown as renewed concern about European debt drove EUR/USD 89 pips lower to 1.3796.
As if its wider current account deficit (-12.9 billion EUR from -7.1 billion EUR) wasn’t bad enough, the euro also had to deal with renewed concerns over Greek debt! I swear this Greek debt issue is a zombie! One day it’s dead, and the next it’s alive and kicking!
Apparently, Germany may not be as supportive of Greece as it once seemed to be. The Germans have maintained their stance against Eurobonds, which has led many to fear that Greece may not get its next loan disbursement on schedule. Furthermore, they’ve delayed talking about the European Stability Mechanism, so chances are that the euro zone’s permanent rescue fund won’t be in place until next year. Also, Finland’s demands for Greek collateral were once again brought up and stirred the markets.
Unfortunately, the whole ECOFIN meeting was largely unproductive, and didn’t really address any of the markets’ lingering concerns. No wonder the euro gapped down to start the week!
Moving on, it seems as though we’ll have to wait until tomorrow, when the ZEW surveys come out, before we get more euro zone data to work with. After that, the action will continue on Thursday as euro zone PMI reports roll out. Until then, we will probably see continued euro weakness since the markets seem to be focused on Greek debt again. Good luck, kids!
[I]“Risk off, risk off… what you gonna do, what you gonna do when the bears come for you… risk off, risk off…”[/I] Risk aversion was in full gear yesterday, which led to some losses for the euro. EUR/USD traded as low as 1.3586, before recovering to close at 1.3689, marking a 22-pip loss. Meanwhile, EUR/JPY dropped 76 pips and finished the day at 104.76.
With no progress being made at last weekend’s G7 meeting, the markets went back to dumping the euro, as fears of a Greek default crawled back into the market. The ECB, EU, and IMF are currently holding back on the next batch of bailout goodies (worth about 8 billion EUR), as they are concerned about Greece’s commitment to austerity measures.
Without these funds, Greece may not even have enough money to make it through the month!
We could be in for some wild moves today, as Greek Finance Minister Evangelos Venizolos will be announcing some of the austerity measures that Greece will be implementing. If the markets are pleased with the proposals, it could give the euro some relief.
At 6:00 am GMT, German PPI figures will be on tap. Expectations are that producer prices rose by just 0.1% last month, which would indicate that inflation is tapering down, which would give the ECB even more reason to keep rates at low levels.
Later on at 9:00 am GMT, the German and euro zone ZEW economic sentiment reports are scheduled for released. The two indexes are projected to print scores of -44.3 and -42.3 respectively. Take note that the reports have been printing lower readings for the past seven months. A better-than-expected result in today’s release may help the euro recover some of its losses.
Despite the mixed economic data from the euro zone, the bulls were still able to make significant headway versus the euro’s major currency counterparts. Thanks to the rumors of an SNB intervention, EUR/CHF was able to rise a solid 87 pips and EUR/USD managed to recover the losses it incurred during the Asian session and end the day with just a small loss.
Let’s go through the two pieces of economic reports released yesterday.
First on the list is the German PPI. It came out with at -0.3%, opposite the 0.1% gain initially expected. Since the PPI is a leading indicator of inflation, it could mean that the CPI could follow suit and also tick lower.
The second important report is the German ZEW economic sentiment survey. It printed a reading of -43.3, slightly better than the -44.3 initially expected. However, the ZEW survey that includes all of the euro zone nations was below forecast as it came in at -44.6 instead of -42.3.
As for the SNB intervention rumors, the market speculated that even after getting EUR/CHF around the 1.2000 level, the central bank still wasn’t satisfied with the peg. Whether the rumor was true or not wasn’t an issue though, as the damage had been done and it showed that the market really believed that the SNB was serious about their exchange rate policy.
No red flags on euro zone’s economic calendar today but the release of the FOMC statement at 6:00 pm GMT will probably have a strong effect on the euro’s price action. It is widely expected that the FOMC will keep rates steady so it will be best to turn your focus to the accompanying statement instead.
Funny how things can change on a dime eh? After being bought up like the Game of Thrones T.V. series and closing the weekend gap, EUR/USD got dropped like a poorly made pilot episode! After nearly testing the 1.3800 mark, EUR/USD soon found itself trading 200 pips lower, and ended the day at 1.3595. was trading below 1.3600, down nearly 200 pips from its highs on the day.
The euro actually got a nice boost thanks to some news that Greece was getting closer to receiving its next bailout tranche. Apparently, the EU and IMF are somewhat satisfied with the new austerity measures that Greece will be implementing. Meanwhile, the ECB eased off their demands that Greek bonds given as collateral be traded on an actual exchange.
However, we all know that it ain’t always fundamentals that drive the market. Late yesterday, risk sentiment took a turn for the worse, as the markets were not impressed with the results of the FOMC meeting. Risk aversion took over the markets, causing EUR/USD to sell-off sharply. Make sure you read up on my U.S. commentary to read all about what happened at the latest FOMC meeting!
For today, we’ve got manufacturing and services PMIs coming out, as well as industrial production figures. The PMIs aren’t expected to print far off from the last month’s release, while industrial production is projected to have dropped 1.1% last July.
Given the current sentiment, if we do see some far worse-than-expected figures, we could see risk aversion take over the market, which may result in a euro sell-off.
Just like Paula Abdul on X Factor, bulls walked out on the euro yesterday as risk aversion hit the markets. It was all downhill for EUR/USD as soon as it opened at 1.3594, tumbling to an intraday low of 1.3387 before closing at 1.3476.
Worries regarding slowing growth in the U.S. and China along with Greece’s problematic financial situation didn’t really sit well with investors. From what I’ve heard, it seems like market junkies don’t feel that policymakers are doing enough to keep the global economy afloat. But let’s wait for updates on the G20 and IMF meetings. Who knows, leaders may just come up with plans to calm markets and allow higher-yielding currencies to rally.
Also, another reason why the euro got thumbs downs from investors yesterday was because of the string of disappointing economic reports that were released from the euro zone.
All the PMI reports for September came in worse-than-expected. The French manufacturing PMI printed at 47.3 and the services PMI clocked in at 52.5 while their forecasts were at 48.6 and 54.4, respectively. Germany’s version of the reports also disappointed markets when its manufacturing PMI printed at 50.0 and missed the 50.2 consensus. Meanwhile, its services PMI was lower at 50.3 than the 50.6 forecast.
Not surprisingly, euro zone’s manufacturing PMI came in at 48.4 and disappointed expectations at 48.6 and the region’s services PMI printed 2 points below forecasts at 49.1.
There was also the industrial new orders report for July which showed a 2.1% contraction for the month, almost double what analysts were expecting.
Our forex calendar is blank for high-caliber reports from the euro zone today, so it would do you well to keep tabs on market sentiment. Also, as I mentioned, be sure you keep tabs on updates about the G20 and IMF meetings, ayt? Good luck!
Did the euro bears run out of steam, or did we just experience a round of profit-taking? The euro took a breather from its heavy losses against its counterparts as the G20 meeting brought a glimmer of hope to the risk-averse traders. EUR/USD clocked in a 48-pip rise to 1.3523, while EUR/JPY climbed by 80 pips to 103.61.
Data released from the euro zone last Friday revealed that Italian retail sales slipped by 0.1% in July when markets were expecting a 0.3% increase. Also, the Belgium NBB business climate showed a -9.4 index reading in September, a disappointment from the -8.9 reading that analyst had expected.
Fortunately for the euro, the G20 meeting that began last Friday provided some relief to the high-yielding currencies. Early press releases hinted at more action from the G20 leaders, which complemented the round of profit-taking at the end of the week.
The question is, will the euro hold on to its gains this week? The idea of a Greek default is once again trending among the forex geeks, and word on the street is that the leaders are actually talking about it already.
Reports due for release this week include the German Ifo business climate at 8:00 am GMT, the German CPI, employment, and retail sales reports in the middle of the week, and the euro zone’s CPI and employment figures on Friday at 9:00 am GMT. Of course, you also need to keep up with the news wires to see if the ECB or any European leaders step up and say something about the short-term outlook for the region. If the leaders continue to underwhelm the markets, then we might just see the euro fall further in the charts.
And just when you thought the euro had another win in the bag against the dollar, bam! The bears pounce on it on the last hours of the New York session. At the day’s close, EUR/USD was 12 pips below its opening price at 1.3784.
Although the German Ifo Business Climate index for September came in better than expected at 107.5 versus the 107.0 forecast, talks about Greece defaulting didn’t really sit well with investors. The clock is ticking for the debt-ridden country and word around the hood is that it may default on some of its loans if it doesn’t get its next tranche of aid by the middle of next month. Yikes!
We have a couple of second-tier reports on tap from the euro zone today but aside from keeping tabs on them, make sure you also keep an ear out for rumors about plans on how to rescue Greece. Some market junkies think that one reason why the euro was able to limit its losses was because rumors about plans on keeping the sovereign crisis from worsening gave investors hope that policymakers are working hard to solve the problem.
Anyway, scheduled on our forex calendar at 6:00 am GMT today is the German GfK Consumer Sentiment index for September. Keep in mind that analysts are eyeing the report to come in at 5.1. Then at 8:00 am GMT, the money supply report for August is anticipated to match its previous reading of 2.0%. Watch out for better-than-expected figures as these may just spark a euro rally!
Well, well, well… It appears that we have a challenger in our midst. EUR/USD, after a couple of days ranging, finally decided to show some muscle and push higher. By the end of the U.S. trading session, the pair was sitting at 1.3595, 84 pips higher from its opening price during the Asian session.
The pair’s move up was mostly driven by the first approval to expand the European Financial Stability Facility (EFSF) by Slovenia’s Parliament. In addition, German Chancellor Angela Merkel assured the market that she is very confident that she’ll win a majority in her coalition to increase the EFSF. These brought some much-needed good news to a market that’s filled with negativity.
Economic data that came out from euro zone were also positive. The M3 money supply report was better than expected as it printed a 2.8% gain instead of only 2.0%. Private loans also beat forecast as it showed a 2.6% gain.
Today, the important release to watch out for is the German Preliminary Consumer Price Index. The expectation is for the index to show a 0.1% decrease in prices, slightly lower than last month’s 0% rate (revised up from -0.1%). If the report manages to beat consensus, we could see EUR/USD continue its bull run.
Just another bad day in the office for the euro, huh? It lost ground against its major counterparts again as euro zone showed very little progress in solving their debt crisis. EUR/USD dropped from a high of 1.3691 to a low of 1.3533 while EUR/JPY closed 17 pips below the 104.00 handle. Is the euro in for more losses today?
Even though Germany’s preliminary CPI report posted a stronger than expected 0.1% uptick, the euro suffered huge losses across the board. It turns out that, despite the recent efforts to keep the Greek debt crisis contained, European officials believe that they’re not making any progress at all. It didn’t help that risk aversion loomed over the markets when the U.S. printed weaker than expected durable goods orders data.
Today is a big day for the euro as Germany is set to vote on the EFSF expansion. Bear in mind that German Chancellor Merkel is facing strong opposition on her decision to help Greece out, which means that they probably won’t allow the EFSF to be increased beyond 440 billion EUR. If that happens, it would imply that Merkel is losing political popularity and that Greece could be on its own. Judging from the severity of the Greek debt problems, it sure looks like they could use all the help they can get. Without it, there’s a higher chance of a debt contagion, which would be very negative for the euro.
On the economic front, Germany is set to print its employment report at 7:55 am GMT today. This could show that joblessness dropped by 9K in August, following the 8K decrease in unemployment seen last July. A larger drop in joblessness could help keep the euro afloat but weaker than expected jobs figures could push it even lower. Stay on your toes!