Strong economic data from Germany, the euro zone’s largest economy, gave the EUR enough courage to put up a fight against the USD and JPY. The EURUSD struggled to consolidate for an entire day while the EURJPY refused to back down further.
Amidst the brewing credit downgrade concerns for euro zone nations, Germany’s solid economic standing enabled the EUR to stay afloat. The German trade balance report showed that the surplus grew from 9.8 billion EUR to 12.9 billion EUR in October. German exports stayed resilient to the rising EUR and rose by 2.5% as global recovery pumped up demand. However, underlying data showed that the rising trade surplus was also partly caused by a sharp decline in imports.
Meanwhile, Germany’s CPI fell by only 0.1%, a smaller decline than the estimated 0.2% drop in price levels. On an annual basis, German CPI recorded its first uptick in almost seven months. Higher energy costs, particularly that of crude oil, pushed the inflation rate higher.
Later on, Germany will report its wholesale price index, which is expected to print a 0.3% rise for November. Also due later is French industrial production data, which might show a 0.6% increase in production. The ECB monthly bulletin, due 9:00 am GMT today, would summarize all the relevant economic data from the euro zone and possibly provide an economic outlook for the region. ECB President Jean-Claude Trichet is scheduled to deliver a speech at 5:30 pm GMT and could provide some reassurance in the face of euro zone’s debt woes.
The fiber (EURUSD) closed flat in yesterday’s trading. For the most part of the day, the pair just moved between an 80-pip range. It opened and closed at 1.4731.
Germany’s wholesale price index (WPI) rose unexpectedly by 0.7% in November after dropping by 0.4% during the month prior. The WPI measures the change in the price of goods sold by wholesalers. Such can be used as a leading indicator of inflation since any rise in prices is usually transferred to end users. The increase in the index, however, had a very muted impact on the euro’s short term valuation.
The ECB’s monthly bulletin in December was also published yesterday. In the report, the bank noted that it expects the euro zone economy to grow moderately in 2010. It was added, however, that the recovery will be uneven and the uncertainty will stay high.
Today (12:15 pm GMT), ECB President Jean-Claude Trichet will deliver a speech at The Economist’s 2nd City Lecture, in London. Traders usually tune in to his speeches for clues regarding future monetary actions and economic outlook. So any dovish or hawkish comment could move the EUR accordingly.
For the second Friday in a row, the euro was blown into bits when data from the US came in surprisingly better-than-expected. The EURUSD traded as high as 1.4773 during the US session but found itself 150 pips when the foreign exchange market closed for the weekend.
Was Friday’s price action the confirmation we needed to declare the correlation break between the equities and the foreign exchange market? Remember that the euro also lost a large amount of ground when the actual results of the US NFP report showed that net jobs lost were significantly lower-than-expected. The euro could continue to lose ground towards the end of the year, especially if we keep on seeing positive data from the US and currency traders continue to unwind their long euro positions.
No important data released from euro zone last Friday and this week could prove to be quite light as the only high profile economic reports due this week are the German ZEW economic sentiment (Tuesday, 10:00 am GMT) and the German Ifo business climate (Friday, 9:00 am GMT).
The German Zew economic sentiment is a survey designed to predict the direction of Germany’s economy over the next six months. Like other sentiment reports, it uses a 1-100 scale to determine whether people are optimistic or pessimistic about the economy. A reading above the “line in the sand” figure of 50.0 means that there were more optimists than pessimists. The forecast for this month is a reading of 50.2. Last month, the survey printed a 51.1 figure, marking the third consecutive monthly decline. If the actual result comes out lower than 50.0, it could spell trouble for the euro as it would mean that respondents (economists, experts, analysts, etc) of the survey are pessimistic about euro zone’s economy.
The German Ifo business climate survey, on the other hand, asks businesses their take on Germany’s economic situation. A rising reading indicates that businesses are getting more and more optimistic about the economy. Businesses are usually the first ones to adapt to changing conditions and a change in their attitude could be a sign of increasing economic activity. The prediction for this month is a reading of 94.9, slightly higher than November’s reading of 93.9.
It was a calm day at sea yesterday, as the lack of any economic storms kept trading volatility at a minimum. The EURUSD pair traded within a tight range of less than 90 pips, leaving the pair to close just slightly higher at 1.4653.
Risk appetite was slightly boosted yesterday, when news broke out that Abu Dhabi would shell out $10 billion to help bail out Dubai from its debt problems. This helped ease some fears of a potential default and lifted risk sentiment. To my surprise however, the market reaction wasn’t as strong as I thought it would be. Perhaps traders are gearing up for higher impact news coming in later this week… or maybe some traders are taking an early vacation! Ha!
Today could provide more movement, as the results of the latest German and Euro zone ZEW economic sentiment survey will be available at 10:00 am GMT. The survey is expected to show scores of 50.1 and 50.9 respectively. While these figures are lower than the previous month’s, they still indicate that investors and analysts remain optimistic about the economy.
Tomorrow will be busy as well, as French and German manufacturing and services PMI reports will be available throughout the day. All the indices are expected to show continued optimism from purchasing managers. If the reports come out better than expected, we could see some bullish moves in EUR pairs.
Unable to survive a beating from the greenback, the euro got crushed to a low of 1.4505 yesterday. Debt concerns in the euro zone resurfaced as Austria joined the ranks of Greece, Spain, and Ireland in terms of fiscal problems.
Investors started to worry about Austria’s exposure to banks in eastern Europe, where the recession hit the hardest. Three banking supervisory bodies have already placed one of Austria’s major banks under surveillance, on top of implementing measures to ensure that certain banks are shielded against bankruptcy from exposure to bad loans. These debt concerns in Austria caused credit woes from several European countries, particularly that of Greece, to haunt the markets again.
Fundamental data from the euro zone has been unhealthy as well. Germany’s ZEW economic sentiment reading fell from 51.5 to 50.4 in November. Euro zone’s ZEW economic sentiment for November also slipped a few notches as it dropped below the 50.0 mark, indicating that economic contraction could be in the cards.
Up ahead, France and Germany will report their services and manufacturing PMI readings starting 8:00 am GMT today. Recall that industrial production and factory orders fell during November, hinting that the PMI readings might print weaker expansions. If the actual data comes in worse than expected, the EURUSD could tumble further.
Bear in mind that most traders could be positioning themselves ahead of the FOMC statement due 7:15 pm GMT today. Would Big Ben and his gang set off a bunch of fireworks later on? Watch out for that!
The euro ended flat versus the greenback yesterday. The EURUSD pair just traded within an 85-pip range and eventually closed at 1.4533.
Better-than-expected score from the French, German, and euro zone PMI initially gave the euro some lift during the start of the European session. The French flash services and manufacturing PMI came in at 59.3 and 54.4 for December, respectively. Germany’s version of the accounts also logged in a score of 53.1 each. Euro zone’s marks also went well, scoring 51.6 in manufacturing and 53.7 in services.
The euro’s strength, however, soon faded as the dollar gained ahead and in the wake of the FOMC’s announcement. The Fed decided to keep its interest rate unchanged at 0.25% for an extended period of time but added that its outlook regarding the US’s labor and financial conditions are improving. This gave investors some sign that the Fed could raise its rate sooner rather than later.
Euro zone’s economic calendar is report-free today. Though, the EUR could swing either way depending on the result of the US’s initial jobless claims for the week ending December 12.
The EURUSD tumbled down a couple of notches again in yesterday’s trading session. It is currently sitting around the 1.4350 region, a price level it hasn’t touched since September this year.
The absence of any significant euro zone data put risk aversion in center stage (the S&P 500 and Dow Jones fell 1%), which put a lot of downward pressure on the EURUSD. It also didn’t help that the Philadelphia manufacturing index from the US came in surprisingly higher, printing a strong reading of 20.4 instead of the 16.2 consensus.
Three important economic reports from the euro zone to watch out today: the German producer price index (7:00 am GMT), German Ifo Business Climate (9:00 am GMT) and Euro zone’s current account (9:00 am GMT).
The German producer price index, or PPI, measures the monthly percentage change in the price of goods sold by manufacturers. Manufacturers usually pass on higher production costs to their customers implying that a climbing PPI puts upward pressure on inflation. This is seen as bullish for the domestic currency because inflation could cause central banks to raise rates. The German PPI coming out later is for the month of November and 0.2% increase is expected, slightly higher than the flat reading seen the month before.
Meanwhile, the reading from the German Ifo business climate survey is predicted to improve this month to 94.6 from 93.9 in November. The basically asks businesses whether they think the economy is improving or not. A rising reading shows that they are getting more confident about the Germany’s economic situation.
Lastly, the euro zone’s current account deficit for November probably narrowed to 2.3 billion euro from the 5.4 billion euro deficit in October.
If you’re still bearish on the euro, I’d watch out today as traders take profit on the dips and close shop for the weekend, especially since the daily charts show that the EURUSD is deeply oversold. Also watch out if the reports I mentioned above come in better-than-expected as they could be the push the euro needs to fight back. Then again, the euro has been showing a lot of weakness in the last few weeks and the sentiment to sell could overpower any kind of profit taking or economic data!
It’s been a cold, cold December for euro bulls, as last week was another downer. The EURUSD pair dropped 300 pips from it’s opening price, to close at 1.4336. Will we see more of the same euro weakness as we start a new week?
The losses could have been worse, if not for a rebound in equities late in the US session, as well as the release of the German IFO business climate report. The index – which measures business confidence amongst German manufacturers, builders and retailers – rose to 94.7, its highest level in 17 months as exports and manufacturing picked up. Once again, Germany has been showing some resilience and signs of sustainable recovery. It seems that Germany will have to put the entire euro zone on its back as other countries are plagued with concerns of credit ratings downgrades.
Another piece of data that was released on Friday was the German producer price index (PPI). The report came in slightly worse than expected, showing just at 0.1% uptick in producer prices. I’d keep an eye out on inflation data over the next 6 months, as it could dictate what moves the ECB will make with regards to interest rates. Remember, one of the main goals of the ECB is to maintain a steady inflation rate of 2.0%. If data suggests that inflation is rising sharply, we may see the ECB react quickly by raising interest rates so as to avoid a run of hyperinflation.
In other news, the euro zone’s current account didn’t meet forecasts, as it posted a deficit of €4.6 billion. It was expected that the deficit would shrink from €5.0 billion to €2.3 billion.
For this week, the only report of significance is the German GFK consumer climate index. The index - which measures consumer confidence – is expected to dip just slightly from 3.7 to 3.6. Still, I don’t expect the index to have much effect on the market. We could see more range like trading over the next couple weeks, as traders head off for the Christmas holidays.
After diving down for the past few days, the EURUSD paused to catch its breath yesterday. The pair consolidated within resistance at 1.4370 and support at 1.4280 in the absence of economic reports from the euro zone.
The German GfK consumer confidence report is due 7:00 am GMT today. It could show that consumer confidence dipped from 3.7 to 3.6 in December, possibly prodding the EURUSD further down. Later on, the Belgium NBB business climate report is due at 2:00 pm GMT. The reading for December is projected to climb from -8.8 to -5.5, still indicating that conditions are worsening but at slower pace.
That’s all for today from the euro zone but keep an eye out for the release of the US final Q3 GDP and their existing home sales for November. If we see better than expected data, we might find higher-yielding currencies such as the EUR recover from its recent losses… if risk sentiment dictates market action, that is.
December appears to the most forgettable month for the Euro as it got another hit from the greenback yesterday. The only ones celebrating Christmas are the euro bears.
German consumer confidence fell for a third time in a row to 3.3 in January as the households’ apprehension regarding the increasing energy costs and a possibility of further job cuts loom. Decreasing confidence is a negative sign for the economy as this usually leads for a tempered spending. Of course, if you’re an individual who is unsure about your future work then it’s only normal to save more rather than spend.
On the other side of the EU, Belgium’s NBB business climate came in worse-than-expected at -7.9 versus the -5.5 consensus. While Belgium’s business conditions may be improving, the actual pace appears to be slower than initially thought.
The weak figures above plus the current sentiment for the dollar place a lot of selling pressure on the euro.
Today (7:45 am GMT), data on France’s consumer spending in November will be available. The number for the said month is projected to rise by 0.3%, slower than the previous period’s 1.1% advance. France is the second major economy in the euro zone, with Germany being the number one. Hence, a cool down in its consumer spending on top of some weak figures in Germany would be a little bearish for the euro.
Last week proved to be a good one for the euro, as it was able to retrace some of its losses before traders headed out for the holidays. It closed the week at 1.4352, up from its open at 1.4300.
It looks like the technically moved, as the euro was looking highly oversold forcing some traders to let go some of their euro shorts.
Data from euro zone didn’t share the same positive tone though. The report on French consumer spending for November showed a drop of 0.1%, opposite the 0.3% increase predicted. Additionally, Italian retail sales for October remained flat and didn’t increase 0.2% like initially expected.
For this week, there will be some economic reports but nothing major.
Tomorrow, Germany is set to release its preliminary consumer price index reading for this month. The CPI measures the average percentage increase (or decrease) in the price of goods and services consumers usually buy. The forecast is a reading of 0.6%, up from November’s revised up reading of -0.1%.
Also, on Wednesday, the M3 money supply report for November is due. The M3 money supply, as the name suggests, measures the total change in the amount of money in circulation and deposited in banks. The consensus is a 0.4% increase. Traditionally, an increasing money supply is seen as bullish for the domestic currency because it could to inflation. And of course, concerns on inflation could put some pressure on the ECB to raise rates in the future.
As expected, we saw some range type movement during the holiday trading week. The EURUSD failed to make any new significant highs or lows and closed the week 60 pips lower at 1.4333. With traders coming back from their skiing trips up at the Alps, what can we expect this week?
The only major euro zone news released last week was the German CPI m/m report. The report showed that German consumer prices rose by 0.7% during the month of December. This marked the largest increase in 8 months and was better than expectations of just a 0.6% rise. Could this be a sign of rising prices in 2010? If this continues, we may see inflation hit the ECB’s target of 2.0% sooner rather than later. And we all know what that means… rate hikes! Still, lets not jump to conclusions – it may be just a one month blip. Let’s wait and see how this develops in the coming months…
Today, the final manufacturing PMI and Sentix Investor Confidence reports come out at 9:00 am and 9:30 am GMT respectively. The manufacturing PMI report isn’t expected to post any changes from its last release, which showed a score of 51.6, while the confidence index is predicted to show a slight uptick from -5.5 to -3.4. However, with these being low key events, their impacts on the market may be minimal.
We’ll see stronger waves tomorrow when German unemployment figures and the euro zone CPI flash estimate come out at 8:55 am and 10:00 am GMT. Word on the Berlin streets is that more jobs were added in December, with 6,000 workers finding some new jobs. As for euro zone inflation, it is expected to show that inflation is now at 0.9%. Given the German report last week, we may actually see inflation hit this figure.
Later in the week, watch out for the industrial new orders (Wednesday) and both euro zone and German retail sales (coming out on Thursday and Friday respectively).
It’s a brand new decade – I hope everyone gets off on the right foot!
What a way to start the year! The EUR staged a strong rally against the USD and JPY after the euro zone released strong economic data. The EURUSD climbed to a high of 1.4456 while the EURJPY surged to 133.80.
Euro zone’s final manufacturing PMI for December was revised from 51.2 to 51.6, indicating that the industry’s expansion was stronger than previously reported. Components of the index show that the upward revision was due to the improvement in France’s manufacturing activity. Meanwhile, the Sentix investor confidence report showed that sentiment improved as the index climbed from -5.5 to -3.7 in January. This implies that investors are becoming less pessimistic with their outlook for the euro zone economy.
Today, Germany will release its employment report which could print 6K in net job losses for November. This could cap the EUR’s recent rallies, considering that Germany has been churning out positive employment figures in the past months. Also due today is euro zone’s CPI flash estimate. The report, which is due 10:00 am GMT, could show that price levels are expected to rise by 0.9% in January.
The euro snapped its 10-day winning streak against the yen yesterday. The EURJPY fell and closed at 131.72 after reaching a high of 133.80 the day before. The EURUSD also slipped to 1.4368 from a high of 1.4485.
German unemployment fell for a sixth straight month by 3,000 to 3.421 million in December as the economy’s exports is starting look better. Germany’s unemployment rate, however, remained the same at 8.1%. Still, some economists believe that unemployment will reach a high of about 3.8 million later this year.
On a separate report, Euro zone’s annualized flash CPI in December came in line with expectations at 0.9% from 0.6% in November. The acceleration in inflation, though, can be mostly attributed to rising energy costs. The price of oil rose to more than double of its 2009 low of $32.70. So despite the spike in the headline CPI, economists still believe that euro zone’s medium term outlook for inflation remains low.
Despite the improvements in the above accounts, the EUR still slipped versus the yen and dollar yesterday.
Today (10:00 am GMT), data on industrial new orders in October will be issued. Orders are seen to have shrunk by 1.0% after rising by 1.7% during the previous month. A drop in the figure could once again be bearish for the euro.
The EURUSD started off on shaky ground early during the Asian session yesterday but eventually found some footing when poor economic data from the US printed and dollar negative comments from the Fed came out.
Despite the EURUSD gains yesterday, the pair’s trading range is intact, indicating that currency traders are holding off from being heavily positioned in one direction ahead of the NFP on Friday. As for economic data, the industrial new orders report for the month of October which was released yesterday showed that orders fell 2.2%, more than twice the 1.0% decline initially predicted.
In today’s economic cupboard we’ve got the German and euro zone’s retail sales report (released at 7:00 am GMT and 10:00 am GMT respectively) and the German factory orders report (11:00 am GMT).
After the previous month’s flat reading, German retail sales are predicted to have risen 0.4% in November. Meanwhile, euro zone’s version of the report is expected to still remain flat, as other consumer activity in other euro zone nations remain subdued. Lastly, the report on German factory orders is anticipated to show a growth of 1.6% November-on-October, opposite the 2.1% decline seen the period before.
If any of these reports come in higher than forecast, we could see the euro find further buying support. Still, as I’ve mentioned, we could see the EURUSD maintain its trading range today as currency traders sit on the sidelines ahead of the NFP report on Friday.
The euro took a dip in the deep end yesterday, after it was pushed in by poor economic data. The EURUSD fell to 1.4323 and hanging on to a support line just above 1.4300.
The eurozone got some bad news when both German and [euro zone retail sales](http://www.babypips.com/forexpedia/Retail_Sales_-_Euro-zone)reports printed worse than expected figures. [German retail sales](http://www.babypips.com/forexpedia/German_Retail_Sales) fell by 1.1%, after it was projected that they would rise 0.4% in November. Similarly, overall euro zone sales fell by 1.2% with early estimations predicting that sales would remain steady. While the euro zone had been posting some decent growth, this growth was helped by a rise in export demand. I took a closer look and saw that domestic demand remains weak. If this continues to persist, we may see more disappointing figures come out in the following months.
A separate report also showed that German Factory Orders m/m didn’t meet expectations, as it posted growth of just 0.2%. It was projected that factory orders rose by 1.6%. Could this be a sign that we could see some weakness in the Germany economy at the start of 2010?
Today we’ve got [euro zone employment](http://www.babypips.com/forexpedia/Euro-zone_Unemployment_Rate) data due at 10:00 am GMT, while at 11:00 am GMT, the [euro zone final GDP](http://www.babypips.com/forexpedia/Euro-zone_Gross_Domestic_Product_%28GDP%29) and [German Industrial Production](http://www.babypips.com/forexpedia/German_Industrial_Production) m/m reports will both be available.
The unemployment rate is expected to have risen slightly from 9.8% to 9.9%. Meanwhile, no changes are expected from the GDP report, which initially printed growth of 0.4% during the 3rd quarter. German industrial production is projected to have risen by 1.1% in November. Still, this reports may be meaningless to traders today. I don’t mean that in an insulting way – I just think that most traders will be waiting for the [NFP](http://www.babypips.com/forexpedia/Nonfarm_Payroll_Employment) report that comes out during the US session! We all remember the strong market reaction to December’s release, so be careful – we may see some late New Year’s Eve fireworks tonight!
The EUR beat down the USD as last Friday’s non-farm payrolls report came in weaker than expected. Despite Germany’s weak industrial production figure and the rise in euro zone’s unemployment rate, the EURUSD managed to surge to a high of 1.4440 during the US session.
Although German industrial production rebounded from a 1.7% fall last October, the 0.7% rise in November was much weaker than the expected 1.1% increase. Meanwhile, euro zone’s unemployment rate reportedly climbed from 9.9% to 10.0% in December as the aftermath of the recession takes its toll on their jobs market. The only piece of relatively good news from the euro zone last Friday was that there was no downward revision on their final GDP reading of 0.4% for the third quarter of 2009.
This week, the euro zone has a bunch of high-impact reports due, including the ECB rate decision on Thursday. But before that, France will release its industrial production report today at 7:45 am GMT. Analysts expect a 0.4% increase in French industrial production for November. If the actual figure comes in stronger than the consensus, this could give the EURUSD enough momentum to break out of its current range.
Price action of the EURUSD could cool down on Tuesday and Wednesday with only the French government budget balance and Italian industrial production figures on tap. These reports are slated to have a minimal effect on the currency pair, which means that it could consolidate ahead of the ECB rate statement.
The ECB will announce its rate decision 12:45 pm GMT on Thursday. Although the central bank is expected to keep its benchmark rate at 1%, comments from ECB officials could set the tone for EURUSD trading, especially if they hint at sooner rate hikes.
Lastly, on Friday, the euro zone will release inflation data at 10:00 am GMT. General price levels are expected to increase by 0.9% year-over-year in December while core price levels could climb by an annualized 1.0% in the same month.
The euro started the week off on a good note as it closed positively against the dollar. The EURUSD went to as high as 1.4556 before closing at 1.4520. Will the 1.4500 technical support hold? We’ll find out today.
The French industrial production exceeded the 0.4% consensus with a 1.1% gain in November. October’s production was also revised up to -0.6% from -0.8%. Demand for cars was high during the past month due to the government’s programs that persuades consumers to purchase new cars. Of course, this naturally led to an increase in vehicle production. As a result, the French automobile industry rose by 8.5%. Still, the overall industrial production remains 3.8% short compared to last year’s level.
The EUR got some boost following the report.
No top tier economic reports are due today in the euro zone. The US, however, will release its trade balance data later at 1:30 pm GMT. US’s trade deficit is seen to have expanded to -$34.9 billion in November from -$32.9 billion. Such could have a bearish effect on the anti-dollars such as the EUR.
Euro trading was directionless yesterday, as the currency just bounced around its session highs and lows. The EURUSD opened the Asian session at 1.4489 and found itself merely 30 pips lower at the end of the US trading session. It seems that the lack of economic data from euro zone kept volatility contained.
Today we will see Germany’s figures on its GDP. The EURUSD is currently stuck in a tight range and if the German GDP report surprises, a breakout could be in the cards. The forecast is that Germany’s economy contracted 4.8% annually, opposite the 1.3% growth seen before. Expect to see the actual results at 8:15 am GMT.
Also, we might see traders position themselves as early as today for the ECB’s interest rate decision coming up tomorrow. The expectation is the bank would keep rates steady at 1% for the ninth consecutive month.
The EUR looked like it was going to zoom for new highs early in the US session yesterday, as it tested as high as 1.4580. However, the EUR bulls retreated, giving back some of its gains to close at 1.4509. Could traders be adjusting their positions ahead the ECB’s interest rate decision today?
The EUR was able to move ahead despite the release of German GDP figures. The report showed that Germany posted a contraction of 5.0% in 2009, slightly higher than the 4.8% forecasted figure.
For today’s opening act, we’ve got euro zone industrial production m/m data due at 10:00 am GMT. Can the euro zone follow the UK’s lead and show growth in industrial production? Early predictions are for a 0.6% increase during the month of November.
Still, I think that traders may sit tight until 12:45 pm GMT, which is when the ECB will be releasing its interest rate decision. While many do not expect a change in interest rates, market participants will be waiting to see what the ECB has to say about Greece. Also, I’m waiting to see if we’ll hear any comments on more plans to scale back quantitative easing measures. Given how we’ve been seeing mixed data from the euro zone, we may see the ECB pause on announcing any exit strategies.