Eur/usd - page 33
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Euro zone inflation falls to 3.5-year low in September
Inflation in the euro zone cooled at a faster-than-expected pace in September and fell its lowest level since February 2010, signalling that the European Central Bank can maintain its loose monetary policy to help the bloc's recovery.
Consumer prices in the 17 countries using the euro edged down to 1.1 percent in September from 1.3 percent in August, slightly below market expectations of 1.2 percent, the EU's statistics office Eurostat said on Monday.
The European Central Bank will hold its rate setting meeting in Paris on Wednesday and is expected to keep rates at a record low and keep them that way for an extended period of time, or possibly deliver another cut if warranted.
September's fall was mainly due to energy prices, which slid 0.9 percent on the year, while rises in the price of food, alcohol and tobacco products slowed significantly to 2.6 percent from 3.2 percent in August.
The bloc's weaker economies, struggling with record joblessness and growth-choking austerity, have seen a big drop in the rate of inflation this year, while Greece is facing deflation.
In Spain, consumer prices fell to their lowest in almost four years in August on fading effects of last year's sales tax hike, while other data showed there was no sign of an improvement in the consumer mood.
In Germany, Europe's largest economy, inflation decelerated to 1.4 percent in September, staying comfortably below the ECB's target of close but below 2 percent and posed no risks to the bank's expansive monetary policy.
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EUR/USD gains as investors avoid dollar on fiscal uncertainty
The euro rose against the dollar on Monday as investors avoided the U.S. currency hours before a U.S. government shutdown was scheduled to occur due to congressional inability to agree on spending legislation.
In U.S. trading on Monday, EUR/USD was up 0.09% at 1.3535, up from a session low of 1.3478 and off from a high of 1.3556.
The pair was likely to find support at 1.3462, Wednesday's low, and resistance at 1.3564, Friday's high.
Congress must approve a spending package by the end of the day to avoid a government shutdown, and waning faith for a last-minute deal steered investors away from the U.S. currency on Monday.
Congressional Republicans and Democrats continued to spar over President Barack Obama's healthcare law, which is seen as a bargaining chip to fund a spending package to keep the government running.
Republicans oppose the president's healthcare reform and want it delayed in exchange for approving a spending deal.
Further pressuring the dollar lower were fears that political grandstanding will return anew later in October when the government hits its debt ceiling.
Congress must lift the spending limit or risk throwing the country into default.
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Europe’s Record Jobless Rate Seen Resisting Recovery
Europe’s nascent economic recovery is too green to make any impact on the region’s jobs market yet, according to economists.
Unemployment in the 17-nation euro area remained at a record high of 12.1 percent in August, according to the median estimate of 30 economists in a Bloomberg News survey. The European Union’s statistics office is due to publish the jobless numbers at 11 a.m. tomorrow in Luxembourg.
“Europe is faced with a high level of structural unemployment and this is not going to change any time soon,” said Annamaria Grimaldi, an economist at Intesa Sanpaolo SpA in Milan. “The recovery is happening painfully slowly and that’s another reason why we’ll see jobless rates far above 11 percent well into 2015.”
Even after the currency bloc emerged from its longest-ever recession, economists predict unemployment to keep rising and peak at 12.3 percent in the final quarter of this year. The job market’s resistance to an improving economy has been the subject of political debate across the region, with European Central Bank President Mario Draghi urging governments to implement “decisive structural reforms” to fight unemployment.
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Spain's Current Account Surplus Rises Sharply In July
Spain's current account surplus increased significantly in July from last year, helped mainly by an improvement in foreign trade.
The balance of the current account was a surplus of EUR1.63 billion in July, higher than EU829.5 million registered in the same month of last year.
Driving the improvement of the balance, the surplus of the services account rose to EUR5.51 billion from EUR5.16 billion a month earlier. At the same time, the deficit of merchandise trade narrowed markedly to EUR164.5 million from EUR1.18 billion.
The income shortfall eased to EUR2.64 billion in July from EUR2.74 billion in June, while the current transfers deficit widened to EUR1.08 billion from EUR412.8 million, data showed.
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Germany’s Unemployment Unexpectedly Rose in September
German unemployment unexpectedly increased for a second month in September, in a sign of an uneven recovery in Europe’s largest economy.
The number of people out of work climbed a seasonally adjusted 25,000 to 2.98 million, after gaining by 9,000 in August, the Nuremberg-based Federal Labor Agency said today. Economists predicted a decline by 5,000, according to the median of 27 estimates in a Bloomberg News survey. The adjusted jobless rate rose to 6.9 percent from 6.8 percent.
While the German economy is still growing, it’s not matching the pace of the second quarter when it expanded 0.7 percent, the Bundesbank said in its monthly bulletin on Sept. 23. Companies from Siemens AG to RWE AG have announced job cuts as they try to manage costs amid a recovery in the 17-nation euro area that the European Central Bank has described as “fragile.”
“The German economy is doing OK but there’s definitely no domestically-driven boom,” David Milleker, chief economist at Union Investment GmbH in Frankfurt, said before the report. “When global trade picks up, so will the German economy. In the medium term that should be good for the labor market.”
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Euro-zone unemployment total falls for third month
Unemployment in the euro-zone edged lower for a third straight month in August, data from European statistical agency Eurostat showed Tuesday, a further sign that the modest economic recovery is continuing.
But, the small improvement in the number of unemployed people to 19.178 million in August from 19.183 million in July wasn't enough of a change to affect the rate which held steady in August from July at 12%.
The July unemployment rate was revised after previously being reported at 12.1%, which means the 12% rate was the lowest since December 2012.
The data surprised economists who had forecast that the jobless rate would hold steady at 12.1%.
Another promising sign came as youth unemployment eased a little to a rate of 23.7% in August from the record high of 23.8% in July and June.
While the improvement will likely be welcomed by the European Central Bank whose monthly interest rate announcement will be held on Wednesday, it is unlikely to lead to any immediate rise in consumer spending despite the further easing reported in inflation on Monday.
According to Eurostat's preliminary estimate, inflation slowed to a three-and-a-half-year low of 1.1% in September. That gives the ECB scope to maintain the ultra-loose monetary policy stance in order to support the fragile recovery.
Other details from the unemployment report showed that there was little change in the jobless rates among the 17 countries that share the euro.
Unemployment was unchanged in August from July at 26.2% in Spain which has the second highest rate of unemployment in the currency bloc, while in Italy the rate rose to 12.2% in August from 12.1% a month earlier.
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Euro’s Eight-Month High at Risk on ECB Stimulus: Market Reversal
Trading patterns in the euro show its rally to an eight-month high is vulnerable, as a political crisis in Italy and speculation the European Central Bank will pump liquidity into the financial system weigh on the currency.
The euro’s 2.5 percent rally since the end of August, bigger than any monthly gain since April, pushed the currency through the upper level of the 30-day Bollinger band, signaling a turnaround is imminent, data compiled by Bloomberg show. It climbed to as high as $1.3588 today, a key Fibonacci level that may act as a barrier to further increases.
While the euro has surged this year as the currency bloc emerged from its longest-ever recession, ECB President Mario Draghi said Sept. 23 he’s ready to deploy another long-term refinancing operation to fund banks. That risks devaluing the euro, as does Italy’s political turbulence, in which the five-month old government teeters on the brink of collapse.
“As you start to push up from $1.36, the ECB starts to become uncomfortable and we’d expect more rhetoric to come out from the members,” Christian Lawrence, a strategist at Rabobank International in London, said in a Sept. 26 interview. “Draghi will hint at the option of another LTRO, and the market will start pricing it in every time he talks about it.”
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This dollar shifted lower against most main currencies about Tuesday following a government shutdown had taken effect before, though better-than-expected files cushioned this greenback's cutbacks. In Ough. S. dealing on Thursday, EUR/USD ended up being up 0. 06% from 1. 3533.
Soros: German elections mean euro crisis over, but EU might not survive
Angela Merkel’s triumph in last month’s German elections signals the end of the euro-zone debt crisis, though it’s far from clear the the European Union, much less the shared currency, will survive over the long run, legendary hedge-fund operator George Soros said Tuesday.
Soros, the billionaire trader who was made famous when he “broke” the Bank of England by shorting the pound in 1992, has long been critical of Germany’s handling of the debt crisis. At a conference in Kiel, Germany, he said Merkel’s victory showed that Berlin had gotten its way:
Meanwhile, Germany finds itself playing a “hegemonic role” that, mindful of its past, it never wanted, Soros said. Berlin “is unwilling to accept the responsibilities and liabilities that go with that role. As a result, Germany is reviled in some other countries while Germany feels unjustly accused of occupying a position that it actively sought to avoid.”
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European Central Bank holds key rate at 0.5%
The European Central Bank on Wednesday left its benchmark lending rate unchanged at 0.5%, as expected, and made no changes to other key rates. ECB President Mario Draghi will hold his monthly news conference at 8:30 a.m. Eastern