Eur/usd - page 16
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Forex - EUR/USD weekly outlook: August 12 - 16
The euro retreated from seven-week highs against the dollar on Friday but the greenback remained under pressure as doubts over when the Federal Reserve may start to unwind its stimulus program weighed.
EUR/USD slid 0.28% to 1.3341 at the close of trade on Friday, down from highs of 1.3399 on Thursday, the highest since June 19.
The pair is likely to find support at 1.3264, the low of August 7 and resistance at 1.3399.
The greenback regained ground but gains were limited by doubts over whether the Federal Reserve will decide to begin tapering its USD85 billion-a-month asset purchase program in September.
Comments by senior Fed officials during the week, including the heads of the Federal Reserve Banks of Chicago and Dallas, indicated that the U.S. central bank could begin to scale back its asset purchase program as early as next month if the economy continues to pick up.
The euro remained supported after stronger-than-forecast German data on industrial production and factory orders earlier in the week reinforced expectations that the euro zone economy is starting to recover.
Market sentiment was also boosted after Chinese economic data on Friday indicated that the slowdown in the world’s second largest economy is stabilizing.
Official data showed that Chinese industrial output rose significantly more-than-forecast in July and consumer price inflation remained unchanged.
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UK wages decline among worst in Europe
Wages in the UK have seen one of the largest falls in the European Union during the economic downturn, according to official figures.
The figures, which were requested by the Labour Party and collated by the House of Commons library, show average hourly wages have fallen 5.5% since mid-2010, adjusted for inflation.
That is the fourth-worst decline among the 27 EU nations .
By contrast, German hourly wages rose by 2.7% over the same period.
Across the European Union as a whole, average wages fell 0.7%.
Only Greek, Portuguese and Dutch workers have had a steeper decline in hourly wages, the figures showed.
Other countries that have suffered during the eurozone debt crisis also fared better than the UK. Spain had a 3.3% drop over the same period and salaries in Cyprus fell by 3%.
French workers saw a 0.4% increase, while the 18 countries in the eurozone saw a 0.1% drop during that period.
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Danish CPI falls more-than-expected
Consumer price inflation in Denmark fell more-than-expected last month, official data showed on Thursday.
In a report, Statistics Denmark said that Danish CPI fell to 0.60%, from 0.90% in the preceding month.
Analysts had expected Danish CPI to fall to 0.80% last month.
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Greece beats January-July budget target, helped by EU funds
Greece easily beat its fiscal targets in the first seven months of the year, propped up by aid from euro zone central banks and European Union funds, finance ministry figures showed on Monday.
The central government had a primary budget surplus - before interest payments - of 2.57 billion euros ($3.4 billion). That compares with an interim target for a deficit of 3.14 billion euros, it said.
The budget excludes the finances of local authorities and social security organizations.
But about half of that 5.7 billion-euro-overshoot is explained by the fact that Athens received more European Union subsidies than expected and also spent far less of them on investment projects than initially planned, the figures showed.
The figures also include about 1.5 billion euros in one-off revenue from euro zone central banks. This money derives from profits which the central banks earned from Greek government bonds they held and which they returned to Athens under the terms of its international bailout.
By contrast, gross tax revenues are about 1.5 billion euros million euros behind target, hit by a severe, six-year recession which has wiped out about a quarter of the country's economy.
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EUR/USD falls to session lows in subdued trade
The euro fell to session lows against the broadly stronger dollar on Monday, moving further away from recent seven week highs as investors positioned ahead of U.S. retail sales data due for release on Tuesday.
EUR/USD hit 1.3279 during European afternoon trade, the lowest since August 7; the pair subsequently consolidated at 1.3281, shedding 0.46%.
The pair was likely to find support at 1.3245, the low of August 5 and resistance at 1.3343, the session high.
The dollar strengthened against the other major currencies amid expectations that strong U.S. retail sales data for July would underline the view that the economic recovery is on track.
The dollar came under broad selling pressure last week after the latest U.S. jobs report on August 2 showed that the economy added fewer jobs than expected in July. The disappointing data saw investors reassess expectations for when the U.S. central bank would start to taper its asset purchase program.
In the euro zone, official data showed that Greece’s economy contracted by 4.6% on a year-over-year basis in the second quarter, compared to expectations for a contraction of 4.8%.
Elsewhere, the single currency was lower against the pound, with EUR/GBP down 0.22% to 0.8585. Sterling remained supported ahead of employment data later in the week, after the Bank of England announced plans last week to link bank rates to the unemployment rate.
The euro edged higher against the yen, with EUR/JPY easing up 0.09% to 128.54.
Official data released Monday showed that Japan’s economy expanded by 0.6% in the second quarter and grew by 2.6% on a year-over-year basis. Economists had forecast growth of 0.9% for the quarter.
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ANALYST: The Eurozone Recession Is Over
Back in late July we declared that the European recession was coming to an end.
It was clear from manufacturing data, as well as bank lending data that the corner had turned or would soon turn, and that although things would remain a holy mess, things would no longer get worse economically and that there would be a modicum of growth.
Since then, this view has grown in popularity.
In a note out last night, SocGen economic Brian Hilliard says this is the week we find that out for sure.
IS THE EURO AREA FINALLY EMERGING FROM RECESSION?
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Greece Back in Play as BBK Strikes out at the German Government
An internal Bundesbank report that has been leaked warns that Greece is going to need new funding next year. In some respects, this is hardly news. The IMF, part of the Troika of official creditors that been managing the assistance program, has been saying this for quite some time.
It has been the German government that has played this down, ostensibly due to the proximity of next month's election, but also part the standard operating procedure of the Merkel government, of waiting for necessity to force its hand.
The Bundesbank has been critical of Greek assistance programs since the start. In the report that has been leaked, the BBK reiterates its views the 1) there are risks to the current program; 2) Greek government compliance is "barely satisfactory" and there is "substantial doubt" about its ability to implement the necessary reforms; and 3) last month's agreement to provide additional funding was approved out of "political necessity."
While it seems that the BBK is critical of Greece, its real target appears to be the German government. Previously, some German contacts mentioned the possibility that Weidmann returns to Berlin after the election to be the new finance minister, but the leaking of this report, which was said to be the finance ministry, seems to undermine such a scenario. Instead, if there is a to be such a move, Joerg Asmussen, of the ECB's Executive Board, may be a more attractive candidate, especially given this SPD roots and the possibility of grand coalition government.. In recent months, we have detected a growing criticism of the Merkel government by the BBK.
The IMF seems to recognize more than the BBK the important progress achieved by the Samaras government in reducing its budget deficit. In fact, data out earlier today shows a small primary (excluding debt servicing costs) for the first seven months of 2013. The primary surplus of about 2.6 bln euros contrasts with the official target of a 3.1 bln euro deficit.
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Poland June Current Account Surplus Rises More Than Expected
Poland's current account surplus increased more than economists expected in June, owing mainly to a marked improvement in foreign trade, latest data showed Monday.
The surplus on the current account rose to EUR574 million in June from EUR165 million in May, the National Bank of Poland said. In June 2012, the balance was a deficit of EUR1.09 billion. Economists had forecast a more modest rise to EUR220 million in June.
The surplus on merchandise trade advanced to EUR561 million in June from EUR43 million in May, and the services surplus moved up to EUR621 million from EUR504 million.
The balance of the income account was a deficit of EUR1.23 billion, which was higher than May's EUR1.12 billion shortfall. The surplus on current transfers decreased to EUR626 million from EUR742 million, data showed.
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German Wholesales Prices Remain Unchanged In July
German wholesale prices showed no change in July from a year earlier, the latest data from the Federal Statistical Office showed Tuesday.
This followed a 0.7 percent increase in June and a 0.1 percent fall in May. On a monthly basis, the price index fell 0.3 percent in July after a 0.4 percent drop in June.
Sharp price declines from last year were observed for ores, metals and semi-finished products as well as for coffee, tea, cocoa and spices, the statistical office said.
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German ZEW Investor Sentiment Increases More Than Forecast
German investor confidence improved more than expected in August, a survey by the Center for European Economic Research, or ZEW, revealed Tuesday.
The economic sentiment index rose to 42 in August from 36.3 in July. This was expected to rise to 39.9.
The indicator reflecting investors' assessment of the current economic conditions jumped to 18.3 in August from 10.6 in July. The reading was forecast to rise to 12.
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