Greece looks likely to default and ask for restructuring. The interest payments are too high. Spanish Bond rates are up too. Not looking good for the Euro…
A day after burning in sovereign debt hell, the euro rose back from the dead and haunted its tormentors. EUR/USD rose a solid 98 pips to close at 1.4330, while EUR/JPY is currently trading just below the 119.00 handle, over 200 pips from its lows on Monday.
Taking a look at yesterday’s price action, it seems that it’s risk appetite all over again! Thanks to generally better than expected PMI reports across the euro zone, the euro got a nice boost across the board. The reports revealed that manufacturing activity is picking up in the euro zone, more particularly in Germany. Considering that the ECB just raised rates, it’ll be interesting to see how this affects business down the road.
Speaking of interest rates, it looks like our buddies over at the ECB are taking a somewhat hawkish stance, as some ECB officials are pointing to rising inflation as reason to keep hiking rates. Take note that in last week’s ECB statement, the central bank did not commit to further rate hikes. For the meantime, let’s keep observing what European central bankers are saying and keep note on which side of the interest ratefence they are leaning on.
For today, all we’ve got is the German PPI report coming in at 6:00 am GMT. Expectations are that German producers paid 0.8% more for their raw materials in March, up from the 0.7% increase we saw in February. Remember, companies normally want to keep their profit margins intact (well, who wouldn’t?) and pass on any additional costs to consumers. If this report comes in exceedingly higher than anticipated, it may just spark another round of euro buying.
Talk about record-breaking! EUR/USD made a new yearly high yesterday as it reached 1.4547 before closing at 1.4513. EUR/JPY had a good day as well since it chalked up a 215-pip rally from its 118.25 open price to a high of 120.40.
EUR/USD seemed indifferent to the weak economic data released from the euro zone yesterday. Germany, the largest economy in the region, printed a mere 0.4% increase in producer price levels, half of the projected 0.8% rise. The 0.4% PPI reading for March was also less than the 0.7% uptick seen in the previous month, suggesting that inflationary pressures are starting to wane.
Let’s see if business confidence in Germany is also beginning to fade when they release their Ifo business climate reading for April. The index is expected to drop from 111.1 to 110.6 this month, which could force the euro to give up some of its recent gains. However, if the actual figure shows an upside surprise, we just might see EUR/USD reach another high. Make sure you keep tabs on that report due 9:00 am GMT today.
Also due today is the Belgium NBB business climate report, which could show that business confidence fell from 6.2 to 5.9 this month. Although this report is slated to have a minimal impact on the euro, I’d keep an eye out for it by 2:00 pm GMT. Good luck trading, folks!
After the EUR/USD’s strong move on Thursday, the pair decided to just take it easy and chillax inside a very tight 55-pip range on Good Friday. It closed the day at 1.4548, a mere 10 pips lower from its opening price during the Asian session.
There wasn’t anything on the data cupboard, as banks were on holiday in observance of Good Friday. This week, we’ll be seeing more of the same as only second-tier economic data are scheduled to come out. In any case, the most important pieces of data will be coming from Germany.
On Wednesday, the German consumer price index will print. It is expected to show a 0.2% inflation rate, down the 0.5% figure seen the month before.
The day after that, Germany will release the unemployment change report. The forecast is for a 36,000 drop in the number of unemployed people in addition to the 55,000 decrease seen in March.
On Friday, the German retail sales report will come out. The market expects a 0.1% increase, opposite the 0.4% fall the month prior.
Alright, that’s it for today! Trading will probably be slow since most European banks will be closed as they celebrate Easter Monday. Keep those stops tight folks!
Ha! It seems like the absence of economic reports had the euro lost like Nemo! While EUR/USD ended the day 20 pips higher from its opening price at 1.4582, EUR/JPY reversed its gains after reaching a high of 120.03. It closed 2 pips lower from its opening price at 119.12.
Is the euro losing its momentum? gulp
A few giddy analysts don’t think so. They say that the currency’s not-so-impressive performance for the past couple of days is only because of the lack of economic data. However, there are also those who think that perhaps investors are being wary of buying euros because of all the talk on sovereign debt.
As I said yesterday, we don’t have anything on tap from the euro zone today so keep an ear out for news on contagion risks as this could send the euro tumbling!
Tomorrow we’ll get dibs on how confident the Germans are on their financial positions with the GfK German Consumer Climate report. Due at 6:00 am GMT, the index is predicted to match its previous reading of 5.9 for April.
Along with that, Germany’s preliminary CPI report for April will also be released. Take note that analysts are eyeing a 0.2% uptick in the general level of prices.
The euro bulls are on a roll! Even though debt concerns in the Euro Zone has escalated, the euro still managed to post gains against its major counterparts yesterday. EUR/USD reached new highs at an intraday high of 1.4658, while EUR/JPY tacked a 26-pip gain at 119.37.
No economic reports were released from the Euro Zone yesterday, but ECB Executive Board member Jose Manuel Gonzales-Paramo rocked the airwaves when he said that a Greek restructuring would have worse impact than the Lehman Brothers collapse in September 2008. Yikes!
Let’s see if the news will finally take its toll on the euro today when the GfK German consumer climate is released at 6:00 am GMT, followed by the industrial new orders report at 9:00 am GMT. Market geeks aren’t expecting much improvement from the 1.2% growth in new purchase orders last January, but keep your eyes peeled for any surprises! I hear that the Fed will also rock the markets today with its FOMC minutes so be sure to stick around!
Can’t touch this! There was just no stopping the euro from closing at its new one year high against the dollar at 1.4795 yesterday. Against the yen, it rallied 198 pips to end the day at 121.35. Boo yeah!
Heck! Not even mixed reports were enough to keep the euro from bagging pips! It was reported that the financial confidence of Germans waned in April. The GfK German Consumer Confidence index printed lower at 5.7 compared to its 5.9 figure in March.
The industrial new orders report also didn’t spark positive vibes. According to the data, the value of new purchase orders placed with manufacturers only grew by 0.9% in February and fell short of the 1.3% consensus.
However, perhaps Germany’s CPI report was enough to get the bulls running. The 0.2% uptick in inflation we saw for March (which was also what analysts had predicted) translates to a 2.6% growth in CPI on an annual basis. Because the year-on-year reading for February was only at 2.3%, this might have gotten a few traders talking about more rate hikes from the ECB!
Of course it also helped that the Fed’s plan to reinvest payments from maturing securities gave traders enough reason not to buy the dollar, while S&P’s move to downgrade Japan’s economic outlook weighed on the yen.
With that said, you may also want to keep an ear out for what’s on tap for the euro’s counterparts aside from the economic data we have on tap from the euro zone.
Today we have a couple more reports from Germany with its data on import prices on tap at 6:00 am GMT and its unemployment figures due at 7:55 am GMT.
It is anticipated that prices of imported goods increased at a slower pace of 1.0% in March compared to the 1.1% uptick we saw in February. Meanwhile, the number of unemployed people is seen to have declined by 33,000 and the unemployment rate is seen to ease down by 0.1% to 7.1% from last month.
Also scheduled to be released is the French government’s report on consumer spending for March. Take note that a smaller uptick of 0.3% is expected after we saw spending print at 0.9% in February.
Whoa boy, slow down! After the EUR/USD’s strong movements on Wednesday, the currency decided to just chill in the charts yesterday and bounce around between a relatively tight 114-pip range. At the end of the day, EUR/USD found itself at 1.4824, a mere 29 pips higher from its day open price.
Data that came out of the euro zone was mixed. The French consumer spending declined by 0.7% in March, opposite the 0.3% increase initially expected. On the other hand, the German unemployment change which measures the net change in the number of jobless people during the previous month beat expectations and showed a 37,000 decrease.
Today, we’ll be treated to a couple more economic data releases, starting with the German retail sales. Due to publish at 6:00 am GMT, the German retail sales is predicted to print a 0.2% rise.
Following at 8:00 am GMT is euro zone’s M3 money supply. The M3 money supply basically measures the change in the amount of money in circulation in the economy. The money supply has a positive correlation with inflation, so a rising figure usually leads to higher interest rate expectations. The market expects a 2.2% rise, slightly higher than the 2.0% increase seen the month before.
Lastly, at 9:00 am GMT, euro zone’s CPI and unemployment rate will be released. The CPI is predicted to show a 2.7% gain while the unemployment rate is predicted to have remained at 9.9%.
Alright, that’s it for the boring stuff today! Good luck trading and make sure you stick to your risk management rules!
Boo hoo! The euro’s winning streak against the Greenback came to an end last Friday as EUR/USD closed 11 pips lower than its 1.4821 open price. EUR/JPY had it worse since it ended 70 pips down from its 120.84 daily open price. Will the euro be able to bounce back this week?
The weak German retail sales figure seems to be the most likely culprit for the euro’s decline last Friday. The actual figure showed a 2.1% drop, much worse than the expected 0.2% uptick. This marked the figure’s second consecutive monthly drop as it reached its 11-month low. Ouch!
Because of that, not even upbeat CPI forecasts for the euro zone were enough to cheer euro traders up. The annual CPI estimate turned out to be 2.8%, slightly better than the 2.7% consensus. With higher inflation expectations, could we expect another rate hike from the ECB?
We just might get the answer to that question this week as the ECB gears up to make its monetary policy decision. Recall that, in order to keep inflationary pressures subdued, the central bank hiked rates by 0.25% during their previous statement. However, my buddy Forex Gump doesn’t seem to think that Jean-Claude Trichet and his men would be in a rush to hike rates again. If you’re wondering why, read his freshest article on the interest rate decisions due this week.
Aside from the ECB statement on Thursday, you also might want to keep tabs on the euro zone retail sales report due the day before. Consumer spending is expected to be up by 0.2% but the recently released German retail sales disappointment poses a downside risk.
Then, on Friday, Germany will release its industrial production report which is expected to print a 0.6% uptick for March. Another disappointing figure from the euro zone’s largest economy could push euro pairs even lower this week so make sure you don’t miss out on these reports!
What a crazy Monday it was for the euro! After it had dropped during the Asian session on the news that Osama Bin Laden had been killed, EUR/USD managed to stage a snapback rally and recuperate all of its losses during the U.S. trading session. The pair ended the day at 1.4832, 18 pips higher from its opening price.
The man behind EUR/USD’s rally was none other than ECB President Jean-Claude Trichet. In a statement yesterday, Trichet reiterated that the central bank would remain committed to price stability (i.e., keeping inflation within the bank’s target rate) despite tough times in the European market. This means that the ECB is ready to raise rates if need be. In other news, the Final Manufacturing PMI yesterday beat the 57.7 forecast and printed a 58.0 reading instead.
Today, the only data on euro zone’s economic calendar is the producer price index (PPI). Due to come out at 9:00 am GMT, it is expected to show a 0.7% rise, slightly lower than the 0.8% gain seen the month before. While the PPI usually does not have a strong impact on EUR/USD’s price action, you should still watch it as it is a leading indicator of inflation. A rising PPI could mean that inflation is starting to pick up, which could cause the ECB to raise rates.
Hang in there, buddy! Despite the round of risk aversion in markets yesterday, the euro held strong against its major counterparts. EUR/USD finished the day near its open price at 1.4833, while EUR/GBP rocketed by 101 pips to .9006.
Even though the Greenback was slammin’ its other major counterparts, the euro still held its ground as a better-than-expected producer price index report lifted the currency. The data showed a 6.7% rise in March, which is not only faster than February’s 6.6% acceleration, but is also the fastest in 2 1/2 years.
With inflation-friendly data like that, it’s no wonder many market geeks are expecting hawkish comments from ECB President Trichet!
I guess we’ll have to wait until Thursday to see if Trichet rises to the occasion and hints on more ECB interest rate hikes. In the meantime, watch out for the Euro Zone’s retail sales report coming out today at 9:00 am GMT. If the report prints higher than the expected 0.2% growth in March, we just might see more interest rate hike junkies flock to the euro!
Another draw??? After dippin’ down low during the Tokyo session and poppin’ up high during the London session, the euro ended the day with a stalemate against its American counterpart. When all was said and done, EUR/USD formed ANOTHER solid doji on its daily chart as it ended the day just 2 pips lower at 1.4831.
Even with the euro zone retail sales report printing a worse-than-expected decline of 1.0% (versus forecasts for a 0.2% rise), the euro was able to keep from falling from its near 17-month highs against the dollar.
That’s definitely not an easy task to accomplish, especially if you consider the bout of risk aversion that knocked down the comdolls yesterday. So how come the euro was able to hold its ground while other major currencies retreated?
One possible explanation is that euro traders didn’t want to budge ahead of the ECB’s rate decision today at 11:45 am GMT. After all, this particular decision will be closely watched by all market players. You can bet everyone will be on the alert for signs of hawkishness or dovishness from the ECB top dog Jean-Claude Trichet. Some say Trichet’s words could decide whether the euro will hit 1.5000 or fall to 1.4500 against the dollar. If you wanna read more on what to expect, I suggest you check out Forex Gump’s article on this week’s rate decisions.
Just in case you want to try your hands at news trading before the big rate announcement, you may get a chance to do so at 10:00 am GMT when Germany rolls out its factory orders report. Forecasts have it printing a 0.4% increase following January’s 2.4% surge. But to be honest, I wouldn’t expect too much volatility from this release since traders will probably be more focused on the ECB rate decision and won’t want to commit to a position ahead of it.
KABOOM! After snoozing against its major counterparts for the past couple of days, the euro finally woke up…on the wrong side of the bed! EUR/USD plunged by a ginormous 304 pips to 1.4527, while EUR/JPY ended the day 308 pips lower at 116.39.
The euro’s draws against its counterparts finally ended when the ECB released its interest rate decision, and ECB President Trichet gave a press conference. Not only did the ECB keep its rates at 1.25%, Trichet was also dovish in his comments. Heck, he even specifically mentioned that there won’t be an interest rate hike in June!
Of course, it also didn’t help the euro that Germany’s factory orders clocked in a 4.0% decline in March, the fastest drop in more than two years. What’s more, the decline was caused by weaker domestic and foreign demand!
Today, only Germany’s industrial production data at 10:00 am GMT is scheduled to come out from the Euro Zone. But that doesn’t mean that y’all should have an early weekend! As you can see in the best forex calendar in Pipsville, the big NFP report in the U.S. is coming out today at 12:30 pm GMT.
Ouch! EUR/USD took another nasty fall last Friday despite the strong results of the German industrial production report. EUR/JPY suffered the same fate as it dropped from a high of 117.59 to a low of 115.21. How low can the euro pairs go?
Industrial production in Germany, euro zone’s largest economy, rose by 0.7% in March, better than the projected 0.6% increase. Components of the report revealed that the construction sector bounced back during the period while strong global demand provided support for Germany’s industrial production.
Although the strong report from Germany enabled EUR/USD to keep its head above the 1.4500 mark, the U.S. NFP just sent the pair tumbling later on. Check out my U.S. economic commentary to find out how that report played out!
Today, Germany is set to release its trade balance while the euro zone will report its Sentix investor confidence index. Both aren’t likely to set off any fireworks but looking at the results of these reports could help with your fundamental analysis later on.
After last week’s fiasco, the euro seems intent to keep a low profile this week as the euro zone won’t be releasing a lot of big reports. The only reports to watch for are the preliminary GDP readings from Germany, France, and the euro zone due Friday. A quick look at the economic calendar reveals that these regions are expected to post stronger growth for the first quarter of the year. Let’s see if these will be enough to bring the euro back up!
As my mama always said, everything can change on a whim! After it looked like the euro was heading to new lows, good data helped give the currency a nice boost. After trading as low as 1.4255, EUR/USD bounced back up to close at 1.4351, marking just a 14 pip loss for the day.
The euro took a hit early in the European session on rumors that Greece would have to say “Antio!" to the euro zone. This news came on a day that ratings agency S&P downgraded Greek’s long-term and short-term debt to BB- and B.
Now, chances are that Greece will not leave the euro zone, but it is clear that the sovereign debt crisis is slowly taking over the spotlight right now. I think this may continue to weigh down the euro over the next month, as it has yet to be determined whether or not Greece will have to restructure its debt.
Luckily for the euro, Germany is telling everybody, “Never fear, Germany is here.” Once again, Germany pumped out good economic data, with trade balance figures soaring past forecasts. The country posted a trade surplus of 18.9 billion EUR last March, which was way higher than the 11.9 billion EUR in February and the expected figure of 14.4 billion EUR. German exports rose by 7.3%, despite the strong performance of the euro.
Looking ahead, all we’ve got on deck today is French manufacturing production. Expectations are that production growth was at 0.4%, just off the 0.7% figure we saw last February. Take note that France is one of the better performing euro zone countries. If today’s report surprises to the upside, it may give the euro another boost.
The euro managed to sneak in some gains against the Greenback and the yen amidst the resurfacing Greek debt concerns. EUR/USD ended almost 50 pips higher than its 1.4352 open price while EUR/JPY closed 40 pips above the 116.00 handle. Can the euro hold on to its gains today?
Weak economic data couldn’t seem to stop the euro from bouncing back yesterday. France reported a surprise drop in industrial production for March as the actual figure showed a 0.9% dip instead of a 0.5% uptick.
News of another bailout package for Greece seemed to get a warm welcome from euro traders. After all, the sooner euro zone can eliminate its debt problems, the sooner the ECB can get back to battling inflation and hiking rates. A Greek official said that a 60 billion EUR bailout package would be drafted during the upcoming EcoFin meeting, but the Greek government denied this news. Well, I’m getting a bit confused here!
No economic reports are due from the euro zone today, which means that updates on the Greek debt situation could continue to drive the euro’s movement. Stay on your toes!
WHERE IS THE LOVE? The euro found itself singin’ to the Black Eyed Peas’ hit single as it took a nasty nosedive yesterday. Strikes in Greece and Portuguese bank problems had traders hatin’ on the shared currency, forcing EUR/USD to plunge by 197 pips and EUR/JPY to fall by 131 pips.
Don’t tell me you didn’t see this one coming! With the way the euro zone’s debt problems have been coming to light again, it was only a matter of time before we saw further losses from the euro.
In Greece, large strikes were held in protest against the government’s austerity plans. Things even turned violent, with protesters throwing rocks and the police whippin’ out tear gas! Of course, having your people violently oppose austerity measures isn’t a good sign for a country that is in dire need of cost-cutting, which is why many believe there’s a big chance Greece may have to restructure its debts or risk defaulting on them.
But Greece isn’t the only one to blame for yesterday’s sharp selloff; Portugal had a hand in it, too! According to S&P, the Portuguese banking system may need more support from the government, putting its credit rating on the line. Ouch! Way to deal a blow to investor confidence, eh?
With such a dark cloud hanging over its head, it’s hard to see the euro posting gains this week. But maybe today’s industrial production report can provide at least a little relief from the bearishness when it comes out at 9:00 am GMT. Forecasts have the report printing a 0.4% growth in output, slightly lower than the 0.5% we say in February. If March can somehow outperform February, it may be enough to trigger a mini euro rally.
Aaah! Like ice-cold water on a scorching hot summer day, talks of interest rate hikes allowed the euro to bounce from its six-week low of 1.4123 and end the day with a 35-pip win against the dollar at 1.4237.
You read that right! Investors looked past worries about the prospects of a Greek debt restructuring when ECB policymaker Luc Coene said that the rate hike in April was “certainly not” a one-time move. Heck! The bulls even seemed to just shrug off the worse-than-expected industrial production report! The value of output produced by euro zone’s industrial sector declined by 0.2% in March and disappointed the market’s 0.4% growth forecast.
Don’t get too giddy buying the euro just yet though! Keep in mind that euro zone finance ministers will get together next week to discuss Greece’s financial situation. Naysayers think that no concrete decisions will probably be made during the meeting and they say that the high uncertainty surrounding it could be bearish for the shared currency. So watch out!
Also be on your toes for what we have on the economic horizon today. At 5:30 am GMT, France will release its Q1 2011 GDP report and it is expected to come in at 0.6%. Germany will then release its own report on economic growth thirty minutes after at 6:00 am. The consensus is for an expansion of 0.9% following the 0.4% growth rate we saw in the last quarter of 2010. Then at 9:00 am GMT, we’ll get dibs on the entire region’s economic growth. Euro zone’s GDP for the same period is anticipated to come in at 0.6%.
Oh, before I forget, make sure you also keep an ear out for ECB President Jean-Claude Trichet’s speech later at 8:00 am GMT. If comes off more hawkish than he was during the most recent ECB interest rate statement, we may just see the euro rebound!
Whoops! I guess Thursday’s rally was just a fluke, ‘coz the euro was back to being a big loser on Friday! Even with awesome GDP figures, it was unable to start a rally and shake off Greek debt concerns. Risk aversion had the euro dipping 132 pips against the dollar while losing 116 pips against the yen.
The fact that the euro couldn’t lift off even with the support of solid GDP data is surprising to say the least. Last Friday, it was announced that GDP in Q1 2011 was up 0.8%, which is 0.2% higher than forecast. Germany and France contributed to this surprising figure as they both exceeded expectations in Q1.
So are the markets really that worried about Greece’s money problems? Well, it certainly looks that way, especially after Trichet spooked the markets when he warned about a possible economic backslide! Pessimists seem to be growing in number and appear to be more convinced than ever that Greece will be forced to restructure its debt. Talk about low confidence!
Let’s see if a better-than-expected CPI report can do the trick for euro bulls. High CPI readings have sparked strong euro rallies before, so you can’t count out the bulls today. Y’all know how traders love to speculate on future rate hikes! If last month’s prices rose more than the consensus forecast of 2.8%, it would probably lead to a euro bounce. Just be sure to check in when the report comes out at 9:00 am GMT!
Surprisingly, despite all the concerns about Greek debt, the euro hasn’t dropped off TOO much, and even managed to post some gains to start the week. EUR/USD rose to 1.4181, closing 105 pips higher from its opening price.
Part of the reason why the euro stayed afloat was probably due to yesterday’s CPI data. While headline figures came in as expected at 2.8%, core CPI rose to 1.6%, slightly above initial forecasts. This brought inflation up to a 30 month high, which should give reason for ECB President Jean Claude Trichet and his band of merry central bankers more reason to stay hawkish in the coming months.
Still, I can’t help but worry about what’s happening with Greece. Right now, euro zone finance ministers are meeting with the IMF, discussing some alternatives to Greece restructuring. Remember, the initial bailout plan was a collaboration between the EU and IMF, so it’ll be interesting to see what IMF officials decide is most appropriate. I’d keep an ear out for these discussions, as it prove to be a catalyst for some major moves in the forex market.
Looking ahead, the only major data scheduled for release are the German and euro zone ZEW economic sentiment reports. The German edition is projected to decline once again, from 7.6 to 4.8, which would mark the fourth straight monthly decline. The euro zone version is also expected to show a decline from 19.7 to 17.9.
While a figure above 0.0 indicates optimism, we gotta take note that the trend is down! If we see worse than expected results in today’s report, it may just send the euro diving down the charts!