Strong data coming out of euro zone gave risk taking more fuel as the EUR soared against safe-haven currencies such as the USD and the JPY last Friday. It began the day at 1.4255 and closed the week a couple of pips above the 1.4300 handle at 1.4336.
The optimistic data came from the purchasing managers� index for manufacturing and services all over euro zone. For instance, the German Flash manufacturing PMI unexpectedly printed 49.0 (vs 47.1 forecast) while the services PMI came out at 54.1 (vs 48.8 forecast). This is the sixth consecutive month of improvement in the PMI numbers, indicating that recovery is close.
For today, euro zone�s report on New Industrial Orders for the month of June is due. The forecast is a 1.7% gain. If this holds, it would be the first growth in new industrial orders since September 2008.
Looking further ahead the week, expect to see some significant economic releases. The July German Ifo Business Climate, which is due for release on Thursday 6 am GMT, is predicted to jump to 89.1 from 87.3 indicating that business conditions have somewhat improved. Meanwhile, the German preliminary Consumer Price Index set for release on Thursday will also be closely watched. Deflation fears have been plaguing prospects of economic recovery in the euro zone as of late and the report could provide further insight on this matter. It remained flat at 0% last month and economists expect the same result in August.
It seems like data coming out this week have quite optimistic forecasts. Will investors be pricing in their expectations early and give risk another healthy run? Will the EURUSD pair attempt to set new yearly highs? We�ll have to see where risk sentiment takes the pair this time around!
With little economic data being released everywhere, we pretty much just saw range bound motion across the board, making for a pretty boring Monday. The EURUSD bounced between a tight 80 pip range, closing the trading day at 1.4304.
Euro zone industrial orders picked up 3.1% from May to June, beating forecasts of a 1.7% increase. This marked the largest increase in 19 months. This was another sign that the recession is nearing its end. Still, there are some who question this growth and attribute it to government stimulus plans. Lets see if the things continue to pick up in the coming months. If not, will we see the European Central Bank take more action?
We will probably see more movement in the market today, as more data will be released across the globe. From the Euro zone, we have the German Final GDP q/q report on deck. A report 2 weeks ago indicated that both Germany and France were out of recession. Germany posted growth of 0.3% in the past quarter. Also due today at 1:00 pm GMT is the Belgium NBB Business Climate index. The index is expected to post a reading of -19.7, an improvement from last month�s reading of -22.8. Take note, 0 is the score that separates improving and worsening conditions. As the index crawls towards 0, it is reflective of growing sentiment that things are slowly getting better.
Tomorrow at 8:00 am GMT, the German IFO Business Climate report will be released. Forecasts are for a score of 89.1, an increase from the previous month�s score of 87.3.
Ho hum, what a slow day for the EUR… Both EURUSD and EURJPY rocked back and forth within their respective ranges, chalking up a few gains at the end of the day. Only a couple of economic reports were released yesterday, namely the German final GDP and Belgium NBB business climate.
Germany confirmed their exit from the recession after reporting a final GDP of 0.3% for the second quarter. This was in line with the preliminary GDP released earlier this month. Looking at the components of the final GDP, notable improvements were seen in private consumption, capital investment, and exports. However, much of the growth was a result of government spending and stimulus programs. The question now is whether this growth would be sustained even after the stimulus programs are withdrawn.
Belgium reported an improvement in business confidence as the National Bank of Belgium’s business climate index climbed from -22.8 to -18.2. This was better than the consensus at -19.7. Still, the index lingers in negative territory, which means that market conditions are worsening.
For today, we’ll be looking at the results of the German Ifo business climate survey. The reading for August is projected to land at 89.1, coming from 87.3 in July. This report is due at 8:00 am GMT. A report on German import prices is also due today but is expected to have minimal impact on the EUR price action. Prices of imports in Germany are looking at a consensus of a 0.7% decline this month. Unless these reports from Germany post stellar advancements, we could be settling in for another slow day for the EUR…
The EUR continued its ascent against the GBP in yesterday�s trading. The uptick in the German Ifo business climate, however, was not enough to give it a wholehearted support as it closed the day on the losing end versus the JPY and USD.
The German business confidence index came in better than expected at 90.5 in August from last month�s 87.4 reading. It was only seen to reach 89.1. The latest score is its highest mark since September of last year. The surprise upside in the figure indicates that the economy is likely to get even better.
The EUR jumped against most of the other majors following the report. Though, it was unable to protect its gains against the USD and JPY due to the mixed economic results in the US.
The GfK German Consumer Climate for September will be reported at 6:10 am GMT. It is seen to improve to 3.8 from 3.5. Any rise in the figure would confirm yesterday�s business confidence results and would likely give boost to the EUR yet again.
The German preliminary CPI for the month of August will also be released some time during the day. The figure is seen to remain flat at 0.0%. However, it is not impossible to see a surprise rise in the number given the recent better-than-expected German data. Such could also give the EUR some lift.
The plethora of data released during the Euro session failed to create any decisive movement on the EUR/USD pair yesterday. It seemed the day was going to be a bore… until the afternoon US session came rolling along.
Just minutes after the afternoon session began, the EUR managed to stage a furious rally versus the USD where it climbed all the way to 1.4400 before finding resistance. It closed the day strongly at 1.4364.
In any case, it seems that consumer confidence in the euro zone has picked up. The August Gfk German consumer climate survey which gave a reading of 3.7, slightly lower than forecast but certainly an improvement from July�s revised down figure of 3.4. That was the highest reading since June 2008!
The German final consumer price index also shared the same optimistic tuned as it reported that the average prices of goods and services purchased by consumers was revised up to 0.2% from a flat reading of 0%.
The M3 money supply was a downer though. It measures the total amount of euros in circulation in the economy and deposited in banks. It only rose by 3% and not 3.3% like economists were expecting.
Today, expect to see EuroStat�s survey on consumer confidence at 9 am GMT. The survey uses a positive/negative scale to determine how consumers feel about the economy. Readings below 0 means consumers are generally pessimistic while readings above 0 indicate otherwise. The consensus is at -21.
For now, it looks like 1.4400 will be the line in the sand… The last bastion of resistance… The final doorway that stands between here and the unknown… Okay, I�m getting a bit too creative there! Let�s see the last trading day brings as investors close shop for the weekend!
The euro cried cncle to end the week, as it fell against the USD, JPY and GBP. The EURUSD closed the week at 1.4301, while the EUR lost against the GBP for the first time in 8 days. Will the EUR bounce back today?
The European Commission released a report last Friday that indicated that consumer confidence rose in July, as the index had a reading of 80.6. At the same time, a separate report measuring consumer confidence by EuroStat also report that confidence rose in July. Their index rose to -22 - less than expected but still an improvement from the previous month’s reading of - 23. No surprises here - after all, we�ve been seeing some good news as of late.
Today, on the economic menu, we have the CPI y/y report. It is expected that inflation rose to show that prices have only fallen by 0.4% from a year ago. Last month, the report printed inflation to be at -0.6%. It is scheduled for release at 10:00 am GMT.
For tomorrow, we have some German data on deck, with retail sales and unemployment change info to be released at 6:00 am and 7:55 am GMT. On Wednesday, the revised Euro zone GDP q/q report is due. The last report showed that the Euro zone contracted by just 0.1% in the past quarter, carried on the strength of Germany and France. Will this week�s report show a revision?
The EURUSD still seems to be enjoying the consolidation mode as it tumbled down for most of the day before spiking up upon the release of stronger than expected Chicago PMI.
Consumer prices in the euro zone declined less than expected as the region�s CPI recorded a 0.2% slide in August. After posting a 0.7% downturn in July, price levels in the euro zone were projected to record a 0.4% slump in August. The recent figure suggests that inflation may accelerate as the global economy makes its way out of the recession, pumping up demand for and the price of crude oil and other commodities.
In Italy, CPI was also better than expected as it recorded a 0.4% increase ahead of the consensus of a 0.2% rise. Retail sales, on the other hand, fell by 0.4% in June against the forecast of a 0.2% uptick.
Germany is set to release retail sales and unemployment change data today. German retail sales, which are due 6:00 am GMT, are expecting a 0.7% increase in July after posting a 1.3% decline in June. Data on unemployment change, which will be released at 7:55 am GMT, is projected to post 33K in job losses for July. Euro zone’s final manufacturing PMI is also due today although this should have a minimal impact on the EUR price action.
The EUR tripped and fell in yesterday�s trading despite some good economic results in both the euro zone and the US. The EUR fell to 1.4218 from 1.4337 against the USD. It also closed down to 132.04 from 133.39 versus the JPY.
The German retail sales in July came in line with expectations at 0.7% after falling by 1.3% in June. The latest reading is its first gain in 3 months as lower prices and increased optimism in the markets enhanced consumer spending. Though, the rising unemployment in Germany plus the low inflation would tend to dampen future spending. Nonetheless, a rise in the figure should reflect positively on the economy and the EUR at least in the short term.
The number of unemployed people in Germany fell by 1,000 to 3.46 million after already improving by 5,000 in the month prior. It was initially seen to rise about 33,000. Germany�s unemployment rate, as a result, remained unchanged at 8.3%, contrary to the 8.4% prediction. However, some of the short term job contracts will expire in the coming months which may cause the unemployment to rise again. Nevertheless, the recent improvement in the figures adds further evidence to a recuperating economy. This also helps the political cause of Chancellor Angela Merkel since she is due to run for national elections on September 27.
Despite the development in the German labor market, euro zone�s unemployment rate still upped to 9.5% from 9.4%. This level is the euro zone�s highest jobless rate since 1999. The number of jobless people in the euro zone increased by 167,000 in July to 15.09 million despite the massive amount of money poured by governments into the economy. Hence, the falling prices and inflation expectations brought about by the lack of demand could prompt the ECB to hold its rate at the current record low level for an extended period of time.
The EUR fell following the release of the euro zone�s unemployment report. It further slid during the US session despite the positive US ISM manufacturing PMI and pending home sales. Investors thought that the stock market already reflects the positive economic data and is already overbought. This led to a broad-based selling of stocks which in turn sent investors back to the safety of the USD and JPY.
Today (9:00 am GMT), the euro zone�s revised GDP for the second quarter will be released. The figure is expected to remain the same at -0.1%. Barring any surprises, the EUR may just be range bound at least in the Asia and euro sessions. However, the EUR may continue to slide if the selling pressure persists during the US session.
“Never gonna give you up… Never gonna let you down…” sang the euro bulls yesterday as they refused to let the EURUSD break through 1.4200 and trend lower. In fact, the EURUSD pair managed to take back some lost ground from the sharp drop last Tuesday.
Later, expect to see the report on euro zone retail sales for July at 9 am GMT. It measures the monthly change in retail purchases by consumers. The forecast is a 0.2% growth, an improvement from last reporting period�s 0.2% fall.
The European Central Bank�s interest rate decision is also on the docket today but the event could prove to be… well, a bore. The ECB has already kept interest rates unchanged at 1% for four months straight already and the expectation today is no different. Interest rates would probably be kept steady. Experts and analysts also speculatean expansion of the bank�s quantiative easing measures would be unlikely. Still, it would be prudent to expect the usual volatility spikes upon the release. The interest rate decision will be announced at 11:45 am GMT followed by a press conference held by ECB President Jean-Claude Trichet at 12:30 pm GMT.
The EUR attempted to push higher yesterday during earlier sessions, but lost its legs midway through the US session. The European Central Bank rate decision turned out to be a non-event and EUR pairs ended up staying within range for the most part.
The ECB, as expected, decline to cut or raise interest rates, keeping the base rate at 1.00%. ECB president Jean Claude Trichet said that while consumer and investor confidence is improving, recovery would still be uneven. Once again, we have another central bank figure expressing optimism and caution at the same time. Trichet also said that the bank upgraded its forecasts for growth, expecting a decline of anywhere between 3.8% and 4.4% this year, and potential for growth as high as .9% next year. I expect that the ECB will refrain from raising rates until they see other more nations within the bloc showing improvement similar to what Germany and France are experiencing right now.
In separate reports, Euro zone retail sales showed a surprise, printing that sales fell by 0.2% in July. It was expected that sales would rise by 0.2%. This could be a sign that unemployment fears are still putting a drag on spending.
Today, at 6:50 am GMT, Jean Claude Trichet is set to deliver a speech at the Watchers Conference in Frankfurt. Watch out for any surprise statements as he is after all, the president of the ECB �what he says can potentially disrupt the markets!
Also, the G20 meetings will be starting today. I�ll be sure to update you on any significant news that comes out from these meetings.
Last week, the euro zone’s economic calendar was peppered with a bunch of exciting reports but the price action of the EUR was a bit bland. This behavior could continue for another week since we’ve got a relatively light economic schedule ahead.
Today’s itinerary has Sentix investor confidence at 8:30 am GMT and German factory orders at 10:00 am GMT. The gauge of investor confidence is projected to climb from -17.0 to -13.5. Meanwhile, German factory orders are expected to record a 2.0% increase after posting an impressive 4.5% uptick in the previous month.
The agenda for Tuesday is trade balance and industrial production figures from Germany. The trade surplus of euro zone’s largest economy is expected to budge from 11.0 billion EUR to 11.1 billion EUR. Industrial production, on the other hand, is projected to be on the optimistic end as the consensus is a 1.6% uptick. Recall that industrial production was down by 0.1% in the previous month. If we see the expected rebound in industrial production, then the EUR might be able to make some headway.
Wednesday has only the German Final CPI, which is expected to record a 0.2% increase, on tap. On Thursday, we shift focus to euro zone’s second largest economy as we look at French industrial production, non-farm payrolls, and trade balance figures. On Friday, the EUR chills out with a couple of low-impact reports, namely the German wholesale price index and Italian industrial production figures.
The EUR took an early lead versus the JPY and the USD during the Asia session yesterday. Suddenly, however, its tank fell empty following the release of the euro zone�s Sentix investor confidence survey.
Euro zone�s Sentix confidence index for the month of September failed to reach the consensus as it only came in at -14.6. It was seen to improve -13.5 from -17.0. The less-than-impressive result caused the EUR to lose some of its previous gains.
In the meantime, Germany�s factory orders rose for the fifth straight month in July by 3.5% after already advancing by 3.8%. It even surpassed the initial estimate of a 2.0% rise. The increase in orders in July was due to the 10.3% expansion in local demand as domestic orders for investment goods spiked by 17.2%. Hence, an increase in industrial production can be expected in the third quarter given the hike in factory orders.
Germany�s trade balance and industrial production for the month of July are scheduled today at 6:00 am GMT and 10:00 am GMT, respectively. Germany�s trade balance is expected to expand to �11.2 billion from �11.0 billion. Its industrial production is also seen to rise by 1.6% after falling by 0.1% in the month prior.
The EUR may be given a short term lift from the positive expectations in both of the accounts.
Volatility made a huge comeback in the market yesterday as the EURUSD broke the 1.4400 and 1.4500 handles in just one day. Fundamentals remain weak but it looks like risk tolerance is here to stay.
The rationale behind the sharp move up of the EURUSD was two-fold. One, a report coming out of the United Nations called out for the replacement of the dollar with an alternative currency to guard developing countries. And secondly, equity markets across the globe staged serious rallies, resuscitating risk appetite.
Economic data that came out of euro zone yesterday was mixed. The German trade balance for July, which measures the net difference in value of exported and imported goods, showed a 12.4 billion euro surplus, much higher than the 11.2 billion euro forecast. Still, German exports are down almost 19% year-on-year. The German industrial production report did not share the same positive tone though as it reported a 0.9% decline instead of the 1.6% growth forecast.
No important economic data due today from euro zone so we might see some range bound movement out of the currency after yesterday�s strong one-directional moves…
Euro domination was still in play yesterday, as the EUR continued to push higher. The EURUSD pair tested the 1.4600 handle before finally closing at 1.4551, once again resetting the yearly high. With more reports coming out from both sides of the Atlantic today, will we the EUR boom… or bust?
Yesterday, ECB President Jean Claude Trichet met with European Parliament President Jerzy Buzek in Brussells. Trichet declared that �it wasn�t time to say that the crisis is over�. No surprises here � Mr. Trichet is generally a pretty cautious man, which can be seen in how he and his posse view monetary policy. Simply put, Trichet is just being careful and probably doesn�t want all these �signs of recovery� to be blown out of proportion. After all, aside from Germany and France, other Euro zone participants are still lagging behind.
We could see more movement in EUR trading today, with French industrial production and trade balance figures available at 6:45 am GMT. Later on, the ECB Monthly Bulletin will be released, which could reveal some insight as to what has been discussed by the ECB as of late. Also, at 8:30 am GMT, ECB member Axel Weber will be participating in the Kiel Institute for the World Economy Global Symposium (phew, that was a mouth full). As a member of the ECB, he may possibly drop hints about future action by the ECB.
With not much high impact reports coming out from the Euro zone, I�d be on the lookout for news coming out from the US over the next couple of days. Also, be wary of potential profit taking given the strong gains by the EUR this week.
The EURUSD kept within its range yesterday as it tried to break the 1.4600 barrier but failed. Still, the EUR refused to let go of its recent gains against the USD despite the cautious remarks from ECB officials.
In their speeches, ECB officials repeated ECB President Jean-Claude Trichet’s comments, downplaying their upgraded economic forecasts and warning that the road to recovery is filled with plenty of obstacles. They reiterated the central bank’s belief that the euro zone economy has already bottomed out but that unemployment would put a drag to growth. They also mentioned that, unless inflation gets out of hand, they are not ready to withdraw their monetary easing policies just yet.
France released a bunch of economic reports yesterday. Industrial production was up by 0.1% in July but this was below the consensus of a 0.6% uptick. French non-farm payrolls slid by 0.7%, which was worse than the expected 0.5% decline. Lastly, the trade deficit of euro zone’s second largest economy narrowed from 3.5 billion EUR to 1.3 billion EUR.
Today’s economic schedule is light once again. Only a couple of low-impact reports are on tap, namely the German wholesale price index and Italian industrial production figures. Price action of the EURUSD could take cue from US economic data or changes in risk sentiment.
The EUR broke its 5 day winning streak as it fell short in last Friday�s trading against the USD and the JPY. Versus the USD, it is already in its new yearly high. Today is a start of a new week. Will it be able to shake off Friday�s losses and continue its uptrend?
Couple of low tier reports, namely the German wholesale price index (WPI) and the Italian industrial production for July, we released last Friday. The price of goods sold by wholesalers in Germany surpassed expectations as it rose by 0.7% after falling by 0.5% in the month prior. The consensus was only for a 0.3% gain. The index is usually used as a gauge of consumer inflation since increases in the wholesale prices are usually passed on to consumers.
On a separate report, Italy�s industrial production in July likewise advanced by 1.0% after contracting by 0.6% in June. The account was only expected to gain by 0.4%. On an annual basis, Italy�s industrial production is still lagging by 18.2%, albeit, it�s better than the estimated 21% slide.
Both accounts did not have any impact on the EUR�s price as it continued to drop as investors book their weekly profits.
The euro zone�s industrial production is on tap today at 9:00 am GMT. The index is seen to slide further by 0.3% after already shrinking by 0.6% in June. In the US, no major economic update is due. The EUR might just be range bound today given the lack of market shifting events.
Tomorrow (September 15), the German and euro zone ZEW economic sentiment is due. Germany�s index is projected to improve to 59.8 from 56.1. Euro zone�s figure, on the other hand, is also seen to increase to 57.8 from 54.9. The figures are likely to jump given the rally in the euro zone�s markets for the first two weeks of September.
Euro zone�s CPI is scheduled for release on September 16. The change in the price of goods and services in the euro zone is seen to slow to 1.2% from 1.3%. A slowdown in pace indicates that there is not much demand to push the general prices up. This may not reflect well on the euro zone�s economy and the EUR at least on the short term.
On September 18, the euro zone�s current account deficit is expected to come in at -4.3 billion Euros. Such is already an improvement from the previous month�s -5.3 billion Euro shortfall.
Risk aversion caused by the tension between US and China over the weekend took the EURUSD a few notches lower during the Asian trading session yesterday. The downward move proved to be unsustainable though as the pair managed to bounce back and made fresh news highs once the US session came rolling along.
Economic data that came out of euro zone yesterday also provides some support for their domestic currency. For one, despite industrial production falling 0.3% in July, June�s figure was revised to -0.2% from -0.6%. In addition, euro zone�s second quarter employment change eased to -0.5%. The first quarter figure was revised up to -0.7% from -0.8%. Fundamentals remain weak but economists are saying that Europe�s economy could return to growth this quarter.
For today, the spotlight goes to the Zew Economic Sentiment for September at 9 am GMT. The report attempts to predict the direction of the economy over the next six months through the use of a positive/negative scale. A reading above zero means that economists are optimistic about the economy. The forecast is a 59.9 figure, slightly higher than last month�s 56.1. The report tends to cause some serious volatility on the market so be on your toes (or stay out) when the report comes out!
EUR bulls horns looked sharp yesterday, as they pushed EUR pairs higher. The EURJPY closed higher for the 2nd consecutive day, closing at 133.63, while the EUR set a new yearly high against the USD. Can the EUR sustain its momentum and continue to bull its way to new highs?
The EUR was buoyed by good economic reports yesterday, most notably by the US retail sales report. The ZEW surveys, on the other hand, had somewhat mixed results. The Euro zone edition came up slightly better than expected, posting a score of 59.6 9 � it was projected to have a score of 57.8. However, the German edition came up short of expectations, printing at 57.7, a little lower than the forecasted figure of 59.9. Still, it was an improvement from the previous month�s reading of 56.1, and is its highest score in 3 years. The rise was attributed to rising factory orders, exports and business confidence. Economists, however, remain a little pessimistic, as they don�t believe that this recent upswing can be maintained as unemployment continues to rise while government stimulus plans will be ending soon. They fear that with out any stimulus, the economy may shows signs of weakness.
Today, we�ve got some inflation on the docket with the CPI y/y report scheduled for release at 9:00 am GMT. The report is expected to show that prices have fallen by 0.2% from a year ago. In the past, we�ve seen fears of deflation rock the EUR. If this comes in much worse than expected, we could see the EUR knocked off the perch that it is currently standing on.
Another new high! The EURUSD reached the 1.4738 mark yesterday as the USD sold off for another day. Risk appetite was kicked into high gear, causing the safe-havens USD and JPY to lose ground as US equities also made new highs. In the Euro zone, CPI came in line with expectations while core CPI beat the consensus.
Consumer prices in the Euro zone fell at an annualized pace of 0.2% in August after sliding down by 0.7% in July. This rate remains well below the ECB’s target of 2% inflation. Core CPI, on the other hand, posted another 1.3% uptick. This supports the central bank’s speculation that inflation would fall negative in the middle of the year before turning positive in the coming months.
Euro zone trade balance data is due 9:00 am GMT today but this report is not expected to have a huge impact on the EUR price action. What traders are looking out for is whether the Swiss National Bank would stage another intervention with the EURCHF, which is now making its way towards the 1.5000 threshold. Recall that the SNB reiterated in their June meeting that they would take action to prevent the appreciation of the CHF against the EUR. The SNB statement is set for 12:30 pm GMT today… so you better watch out!
The EUR soared against the Yen for the fourth consecutive time yesterday despite the slim gains in the euro markets and the profit taking in the US. The EURJPY pair is currently trading around 134.50 and may stay within this area today given the lack of sentiment shifting events in Japan, euro zone, and the US.
Germany�s producer price index (PPI) is on tap today at 6:00 am GMT. The month-over-month figure is expected to rise by 0.1% in August after falling by 1.5% in July. The PPI can be used as an indicator of Germany�s inflation as any increase in the producers� input prices is usually transferred to consumers. Any rise in the prices, given Germany�s present economic health, may give the EUR some lift.
The release of the euro zone�s current account balance is also scheduled later at 8:00 am GMT. Euro zone�s current account deficit is seen to have shrunk to - �4.3 billion from - �5.3 billion. We might see a surprise upside in the figure given the unexpected jump in the euro zone�s trade balance that was published yesterday. Euro zone�s trade balance came in at �6.8 billion, which was almost 6 times than the �1.2 billion consensus.