Daily Economic Commentary: Euro zone

Trading Discussion News and Economy
1059

Uh oh. It looks like the euro wasn’t able to shake off its Monday blues yesterday. The shared currency finished lower against most of its counterparts with EUR/USD down by 21 pips at 1.3266 and EUR/JPY ending 47 pips below its opening price. What happened to all the swag we saw last week?

Nothing.

The lack of economic reports from the euro zone probably led to a bit of profit-taking ahead of the much-anticipated ECB rate decision, which is due later this week.

But don’t worry! Today, there are a few second-tier data due for the euro that could offer the currency a clearer direction on the charts.

We kick things off at 6:00 am GMT when the GfK consumer climate index for July is released. A better than expected reading from 6.9 will probably be bullish for the euro. At 7:00 am, we’ll get to sink our teeth into the Spanish GDP report with the consensus at 0.3%.

Then at 9:00 am GMT, the German preliminary CPI will be released and it is eyed at 0.3%.

If you’re looking to buy the euro today, keep your fingers crossed for positive figures!

1060

The euro bulls and bears locked horns (and paws?) yesterday, but neither side was able to gain the upper hand. EUR/USD traded within its daily range and eventually closed at 1.3262, just 4 pips below its opening price. Will one of the camps be able to gain momentum today?

Unfortunately, yesterday’s lineup of second tier data failed to direct EUR trading.

The GFK German consumer climate and Spanish flash GDP report pretty much came in as expected, printing at 7.0 and -0.1%, respectively.

We did get an upside surprise from the German preliminary CPI report, which showed that inflation was at 0.5%, slightly more than the anticipated 0.3%. Still, this didn’t cause a ruckus in the markets.

For today, we’ve got another round of second tier data headed our way, so let’s see if this can provide more direction for EUR pairs.

First up, German retail sales figures are due at 6:00 am GMT, with expectations being that sales grew by a mere 0.1% last month, way below from the 0.7% we saw the month before.

Later on, the German unemployment report is projected to show that 1,000 new jobs were created last month, which would mark the second consecutive month of jobs gains.

We will also see the euro zone CPI flash estimate (anticipated to show inflation at 1.6%) and the euro zone unemployment rate (slight increase from 12.1% to 12.2%) at 9:00 am GMT.

While one report may not make or break the euro today, should we see most of them come in better than expected, we could finally see EUR/USD break above 1.3300. On the other hand, a combination of poor data could send the pair tripping below the rising trend line.

1061

For a while, EUR/USD was trading like a headless chicken, but when it finally got its bearings, it decided to climb higher. At the end of the day, it closed at 1.3303, up 41 pips on the day.

Reports from the euro zone were mixed yesterday, which might explain why the euro was trading so wildly in the London session. On one hand, we got word that German retail sales and French consumer spending saw large declines in June. But on a more positive note, German, Italian, and euro zone-wide employment figures all came in better than expected. Unemployment in the region stayed at 12.1% for the fourth consecutive month, amidst forecasts that called for an increase to 12.2%.

Today, we have some minor PMIs coming out early in the London session. As a whole, the euro zone’s manufacturing PMI is expected to stay at 50.1.

Then at 11:45 am GMT, the ECB is slated to hold its monthly rate decision. Moments after that, at 12:30 pm GMT, the central bank will hold its press con. Though no changes are expected from the ECB this time around, the statement could go either way for the euro. The euro may receive a boost if the central bank shows optimism in light of the recent reports (such as manufacturing and services PMIs). But the euro may also take a tumble if Mario Draghi brings up negative deposit rates again.

1062

Where to, euro? Thanks to an onslaught of tier 1 economic events, the common currency had trouble establishing a clear direction against its counterparts yesterday. EUR/USD and EUR/GBP both saw losses while EUR/JPY and EUR/CHF saw significant gains.

Early in the London session we saw Spain and Italy’s manufacturing PMI as well as the region’s final manufacturing PMI. Spain’s numbers ended up disappointing expectations while Italy and the euro zone’s data showed slight upticks

What caught the investors’ attention though, is the ECB’s monetary policy decision. Although Draghi announced that their interest rate will remain at 0.50%, he also stated that the accommodative interest rates will likely stay low for an “extended period of time” and that downside risks in the region haven’t subsided yet. Notice that he didn’t talk much about the central bank’s other stimulus options this time around. As a result, the euro found support after an initial selloff.

Will the euro be as lucky again today? Only Spain’s unemployment change scheduled at 7:00 am GMT is on tap today, so y’all better watch out for other news events cough NFP cough that might affect risk appetite!

1063

Thanks to weak euro zone reports, the common currency pared some of its intraweek gains against its counterparts. EUR/USD shot up on a disappointing U.S. report though. How the heck did that happen?!

Just hours before the U.S. NFP report is released, the euro region printed Spain’s unemployment change as well as the euro zone’s PPI numbers. Unfortunately for the euro, both came in weaker-than-expected as Spain only showed a 64,900 increase in jobs, which is way less than the expected 80,000, while the PPI report came in flat when at least a 0.1% growth is expected.

EUR/USD was spared from the bloodshed though. As I mentioned in my USD update, a much weaker-than-expected non-farm payrolls report questioned the rate at which the U.S. growth is trickling to the jobs market. As a result, the Greenback took losses across the board.

Will the euro get back in the bulls’ good graces this week? On tap today are a bunch of services PMIs, starting with Spain’s at 7:15 am GMT, followed by Italy’s numbers at 7:45 am GMT and the euro zone’s final numbers at 8:00 am GMT. At 8:30 am GMT we’ll see the Sentix investor confidence followed by the last report of the day, the euro zone retail sales at 9:00 am GMT. The reports are generally expected to print higher numbers than last month, but don’t let me stop you from expecting surprises!

1064

Despite positive data from the euro zone, EUR/USD was unable to find support yesterday. The pair had begun the day at 1.3276, went as low as 1.32312, before it ended the U.S. trading session at 1.3257.

The regional services PMIs, for instance, were all higher than expected. The Spain’s version came in at 48.5 versus the 48.4 forecast. Meanwhile, Italy’s services PMI was at 48.7, which was notably higher than the 46.6 forecast. And finally, euro zone’s retail sales report was better than consensus. The decline in sales was only at 0.5% and not 0.6%. Last month’s figure was also revised up to 1.1% from 1.0%.

Today, we’ve got two important reports on deck from the euro zone. The first one is Italy’s preliminary Q2 GDP. It is estimated to show that the economy shrank by another 0.4% after Q1’s 0.6% contraction. The second one is the German Factory Orders. A reading of 1.1% is anticipated, which is opposite the 1.3% decrease seen the month before. Let’s see if the positive expectations can push EUR/USD above the 1.3300 handle.

1065

Aww, snap! Positive data just came out of the euro zone, you know what that means right?? That’s right, some euro lovin’! Yesterday, the shared currency finished higher against its counterparts thanks to better-than-expected German factory orders.

EUR/USD was up at 1.3308 after the New York session close, much higher than its opening price at 1.3259. Meanwhile, EUR/GBP was up 37 pips at .8672.

Data released yesterday showed that factory orders from Germany were up by 3.5% in June. This was more than THRICE the 1.1% forecast and consequently led to optimism for the region’s largest economy. Boo yeah!

If you plan on trading the euro today, be on your toes for more data coming out of Germany. Later at 10:00 am GMT, the German industrial production report will be on tap. A figure better than the 0.3% forecast will probably be bullish for the euro, so watch out!

1066

Mixed results for the euro, as it surged past the dollar but took some hits against the pound and yen. This just goes to show that demand for the shared currency isn’t as strong as one would have thought had he only had a glimpse at EUR/USD.

Monthly German industrial production growth figures gave the euro some nice support, as it printed solid month-on-month growth of 2.4%. On a yearly basis, this led to an increase of 2.0%, indicating that the German economy could be gaining momentum and could be begin stabilizing soon.

For today, all we’ve got are German trade balance figures coming in at 6:00 am GMT. Rumors out of Berlin are that Germany should post a trade surplus of 15.2 billion EUR for last month, indicating that more goods are still being shipped out than being ordered in, which is indicative of competitiveness.

1067

Taking advantage of yet another day of dollar weakness, the euro bulls pushed the shared currency to further gains yesterday. EUR/USD broke past its recent highs to test the 1.3400 handle before settling at 1.3380. Now that it’s approaching its June highs, what’s next for the euro?

The euro got a slight boost from German trade balance figures, which showed a surplus of 15.7 billion EUR. Not only was this better than the anticipated 15.2 billion EUR figure, but it also marked a nice improvement from the 14.6 billion EUR we saw last month.

What made the euro’s performance even more spectacular was that it happened despite the ECB monthly bulletin showing that the central bank had downgraded its growth forecasts. The ECB changed its forecasts for 2013 and 2014 to -0.6% and 0.9%, respectively, down from earlier predictions of -0.4% and 1.0%. Nevertheless, despite the downgrade, ECB officials do believe we’ll see gradual improvement for the rest of the year, and that this should carry over on into 2014.

No biggies lined up for today, so let’s see if the bulls can keep it up. Don’t be surprised if we see some profit taking take place ahead of the weekend!

1068

The euro was attacked from all sides last Friday as traders lost love for the common currency. It tracked losses not only against the Greenback, but also against the pound, yen, and the franc. What’s up with that?!

My homies tell me that some traders are beginning to worry about the euro zone’s growth prospects. As I mentioned in my update last week, the ECB had downgraded its forecasts and hinted that the less-than-stellar growth will be seen in the foreseeable future.

Of course, it also didn’t help that France’s industrial production data failed to follow Germany’s better-than-expected numbers as it fell by 1.4% when a 0.3% growth was expected in June. Even Italy’s trade balance report didn’t meet its 4.22 billion EUR surplus expectations since it only checked in at 3.62 billion EUR.

No major reports are scheduled today, but keep an eye out for reports from peripheral countries that could hint at the pace of their recovery. More specifically, watch out for the German ZEW economic sentiment out tomorrow, three GDP reports on Wednesday, and the euro zone’s CPI and trade numbers on Friday.

Good luck and good trading, kids!

1069

Down but not out! EUR/USD ended the day in the red, as the Greenback started the week on a strong note, yet the pair still managed to hold on to the 1.3300 handle. Will euro zone data due today trigger a bounce or a break?

There were no economic reports released from the euro zone yesterday, leaving the euro victim to dollar strength. It didn’t help that Greece printed a better than expected GDP reading, as the nation contracted by only 4.6% instead of slowing down by 4.9% in the second quarter of the year, since there were speculations that the debt-ridden nation would need yet another set of bailout funds.

For today, Germany is set to print its ZEW economic expectations figure. Analysts are expecting to see an improvement from 36.3 to 40.3 for August, which would reflect stronger optimism for euro zone’s largest economy. Along with this, the euro zone is set to print its industrial production figures and ZEW economic sentiment index at 10:00 am GMT. Stay on your toes because strong figures could provide support for the euro for the entire day!

1070

Man down, man down! Despite the extremely positive ZEW survey, EUR/USD still received a major blow to the gut yesterday. The pair began the day at 1.3304 and ended the U.S. trading session 38 pips lower at 1.3266.

The German ZEW Economic Sentiment survey that was released yesterday printed a reading of 42.0. Not only was it significantly better than forecast, but it was also much higher than the previous month’s reading of 36.3. In addition, the ZEW Economic Sentiment that takes into account the entire euro zone reported a rise to 44.0 from 32.8.

EUR/USD experienced a huge drop during the U.S. trading session. The U.S. retail sales, which was anticipated to show a rise of 0.4%, came in with a huge upside surprise. It published a 0.5% increase in sales.

Today will be a big day for the euro since the Q2 2013 GDP reports of various euro zone member nations will be published. The data will start coming out at 5:30 am GMT, beginning with France’s, followed by Germany’s, and then the entire euro zone’s. Analysts estimate that France expanded 0.1% and Germany grew 0.6%. The euro zone is expected to have grown by 0.2%, which is opposite the 0.2% contraction we saw in Q1.

1071

So what if the euro zone is technically out of recession? The euro still couldn’t find any lovin’! EUR/USD spent the entire day trading sideways, eventually settling 5 pips lower at 1.3261. What’s up with that?!

So it’s official: the euro zone is finally out of its slump! It posted its first quarter of growth in almost 2 years as the economy expanded by 0.3% in Q2 2013 versus the 0.2% forecasts. But the markets didn’t seem to be too impressed. Apparently, investors are still skeptical about the outlook for the region.

Truth be told, I don’t blame them. With governments tightening their belts, tight credit conditions, and high rates of joblessness, it’s clear to see that the euro zone still has many hurdles to overcome.

Today, we won’t be getting any reports from the euro zone. In fact, some European markets will be closed in celebration of Assumption Day, so there’s a chance this may affect the euro’s normal volatility in the London session.

1072

Never count the euro out! Even though the currency miserably failed to hold its ground during the early morning U.S. session, it was able to recover its losses… and then gain even more. EUR/USD began the day at 1.3261, fell as low as 1.3205, and then closed at 1.3355.

According to news reports, the euro rose due to the rising speculation that the Fed would indeed keep their stimulus programs in place until the end of the year. Data has been mixed, which is different from the central bank’s optimistic forecast.

No data was released yesterday but we’ll be seeing a few medium-tier data today. The first one is the current account balance. It comes out at 8:00 am GMT and it is expected to show a 21.2 billion surplus USD. The second one is the euro zone CPI. It’s going to publish an hour after and it’s estimated to show a 1.6% rise in the core and 1.1% in the headline. Given how fundamentally the euro has been acting on data, better-than-expected results will likely boost the euro.

1073

After a great run up the charts on Thursday, the euro gave back some of its gains on Friday, as EUR/USD finished 20 pips lower at 1.3334. What could be in store for us this week?

Current account figures printed a surplus of 16.9 billion EUR, which was down from the 19.5 billion EUR we saw last month and also failed to hit forecast at 21.2 billion EUR. Meanwhile, the monthly headline and core CPI reports came in as a expected at 1.6% and 1.1%, respectively.

For the start of the week, we’ve got no biggies on tap, with only the second-tier German PPI report due tomorrow at 6:00 am GMT. That said, we may see more consolidation take place on EUR pairs. Nevertheless, make sure you pay attention to what comes out from across the Atlantic as well, as you never know what might rock the markets!

1074

It was a pretty slow day on EUR/USD to start the week. The pair spent the entire day chilling above the 1.3300 handle. It rose to a high of 1.3376 in the London session but eventually settled at 1.3339, just 9 pips above its opening price.

With the euro zone publishing no economic reports, it really isn’t all too surprising that EUR/USD wasn’t too active. However, we did get a bit of good news from German Finance Minister Schaeuble, who happens to be a close ally of German Chancellor Angela Merkel. He claims that even though the euro zone hasn’t completely fixed its economic problems, it is moving in the right direction.

We only have the German PPI on tap today at 6:00 am GMT. It’s expected to print a 0.2% uptick in producer prices. It really isn’t known to be a big market mover, so don’t expect volatility to spike anytime today. It might be best to just sit tight and monitor market sentiment for now. Good luck and stay sharp, homies!

1075

Six-month highs, baby! The euro kicked butt on the charts yesterday, tapping multi-month highs against the dollar and racking pips from the yen. EUR/USD soared up to 1.3453 before finishing the day with an 83-pip gain at 1.3422. Meanwhile, EUR/JPY was up 48 pips for the day at 130.51.

No major report was released from the euro zone yesterday. However, German finance minister Schauble graced the markets with his optimism, saying that he expects growth to print at 0.7% this year instead of earlier forecasts at 0.5%.

I wonder if the positive vibes from his speech yesterday would still linger in the markets today. No reports are due for the euro but keep an ear out for unexpected events such as the one we witnessed yesterday. Be careful with your trades, ayt?

1076

Ah, how the mighty has fallen. After posting a new high on Tuesday, the euro shifted gears and weakened heavily yesterday. EUR/USD started the day at 1.3422, fell to an intraday low at 1.3345, and then settled at 1.3356.

No major reports were released from the euro zone yesterday, which meant that the euro was at the mercy of the U.S. data. In the U.S., the Existing Home Sales report came in better than expected while the FOMC meeting minutes showed that the Fed was on track to taper its bond buying program.

The data we’ll have to work with today is the euro zone Manufacturing and Services PMIs. They will begin coming out at 7:00 am GMT, starting with the France’s, followed by Germany’s, and then the entire euro zone’s.

Individually, they do not have a strong impact on price action but if they all come in with the same result (either better than expected or worse than expected), they could cause some major moves in the euro pairs.

1077

The euro bulls partied loud and hard in Pipsville yesterday as data from the euro zone supported claims that the region’s recovery is gaining momentum. The common currency ended the day almost unchanged against the Greenback, but posted gains against the pound, yen, and the franc.

The euro zone’s PMI numbers brought the euro in the green as Germany’s manufacturing and services PMIs both exceeded their previous readings AND analyst expectations. Ditto for the euro zone’s manufacturing and services PMIs, with the manufacturing numbers even coming in at a two-year high. The only disappointment came from France when its manufacturing PMI came in at 49.7 (lower than the expected 50.4) and its services PMI clocked in at 47.7 (against 49.3 expectations).

Let’s see if today’s reports will have the same impact on the euro. At 6:00 am GMT we’ll see Germany’s final quarterly GDP, followed by the euro zone’s consumer confidence numbers at 2:00 pm GMT. No changes are expected from both reports, but keep an eye out for any surprises!

1078

Thanks to the contrasting data between the euro zone and the U.S., EUR/USD was able to rally last Friday. The pair began the day at 1.3356, soared above 1.3400, before ending the day with a respectable 29-pip gain at 1.3385.

In the euro zone, it was reported that Germany’s GDP grew 0.7% in the second quarter, which was in line with expectations. It was a respectable figure given that most of the euro zone was stuck in the recession pit.

Meanwhile, in the U.S., the new home sales report disappointed. It showed that there was a 13.4% drop in sales to 394,000 in July, which was far worse than the forecast for a 1.4% decrease. The dismal figure kept expectations going that even though the Fed is ready to taper its $85 billion in monthly purchases this year, it may come at a later date such as December instead of September.

The euro zone’s data docket is pretty light this week as the only red flag is the German IFO Business Climate survey. It’s scheduled to come out tomorrow, at 8:00 am GMT, and it is anticipated to print a 107.1 reading. Last month, the reading was at 106.2. A rising number is normally considered bullish for the domestic currency.