Eur/usd - page 56
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EU Disagrees With S&P's Rating Downgrade
The European Commission said the credit rating of European Union should be assessed on its own merits, due to the special treaty based status of the EU budget.
Earlier in the day, Standard & Poor's lowered the sovereign ratings of the EU from 'AAA', citing deterioration in overall creditworthiness of member states amid contentious EU budgetary negotiations.
"The Commission disagrees with S&P that member states obligations to the Budget in a stress scenario are questionable," EU Economic and Monetary Affairs Commissioner Olli Rehn said.
All member states have always and also throughout the financial crisis provided their expected contributions to the budget in full and in time.
source
Sweden November Producer Prices Decline
Swedish producer prices in November decreased from the same month last year, data released by Statistics Sweden showed on Friday.
Producer prices declined 0.4 percent year-on-year in November. In October, prices fell 0.7 percent.
Prices decreased 1.2 percent in the export market and 2.2 percent on the import market. Domestic producer prices rose 0.4 percent.
Month-on-month, producer prices rose 0.4 percent from October, when prices dropped 0.3 percent. Domestic producer prices edged up 0.1 percent.
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EUR/USD Forecast – December 23-27
EUR/USD lost ground after 5 weeks of gains, as the Fed finally announced QE tapering. Is it set to continue falling or can it stabilize in the week of Christmas? Here is an outlook for the market moving events and an updated technical analysis for EUR/USD.
The Fed finally announced QE tapering, worth $10 billion. While the size is small and the move was accompanied with stronger forward guidance, it is still tighter monetary policy, resulting in a stronger dollar. Solid German PMIs and business surveys were far from enough to battle the USD rally, especially as the other core country, France, saw weaker PMIs. The ECB is ready to act with further monetary stimulus as the Fed begins going in the other direction. Yet a major crash in EUR/USD is still to be seen.
Wednesday, December 25th is Christmas Day, and Thursday the 26th is Boxing Day. Trading volume will remain limited during all the week.
* All times are GMT
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EU banking union too complicated, too slow
An EU system to prevent a repeat of the massive bank bailouts which crippled the economy is a major step but it is also too complicated when speed is absolutely essential, analysts said.
"From the moment a bank is identified as being at risk, up to the moment it is closed, the new system might require approvals from as many as 100 people," said Annalisa Piazza of Newedge.
The authorities must wind up a failing bank as quickly as possible, and above all, while the markets are closed if they want to limit the fallout and the possibility of a run on deposits.
Fail to do that and the risk is one problem bank will bring down others, setting off a disastrous chain reaction and sucking in governments, as in Ireland, which eventually had to seek an international bailout.
EU finance ministers agreed Wednesday a Single Resolution Mechanism to close problem banks, with the cost covered by a special bank levy to be phased in by 2025.
The SRM will work alongside an already agreed new supervisory regime run by the European Central Bank.
The last element, a common deposit guarantee system to reassure nervous savers, was put in place Tuesday after European Parliament approval.
This banking union system was drawn up in response to the financial and then debt crises which brought down many banks and drove the eurozone into a deep and damaging recession.
It involves possibly the biggest transfer of national sovereignty to Brussels since the euro was created and as a result, required painful compromises which show up clearly in its workings.
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EUR/USD weekly outlook: December 23 - 27
The euro fell to a two-week low against the U.S. dollar on Friday before bouncing back to settle modestly higher as investors sold the greenback to lock in gains from a rally stemming from the Federal Reserve's decision to trim its USD85 billion a month stimulus program.
EUR/USD fell to 1.3625, the weakest level since December 6, before clawing back to settle 0.07% higher to end at 1.3672. For the week, the pair lost 0.48%.
The pair is likely to find support at 1.3625, Friday’s low and resistance at 1.3810, Wednesday’s high.
Demand for the greenback remained supported after the Fed said Wednesday that it would reduce its USD85 billion-a-month bond buying program by USD10 billion in January, amid indications of an improving U.S. economy.
The U.S. central bank reiterated that interest rates are likely to remain low even after the unemployment rate drops below 6.5%, the threshold at which the Fed has previously said it would start to consider rate increases.
On Friday, the Commerce Department said that the U.S. economy expanded by 4.1% in the third quarter, well above initial estimates for 3.6% growth, adding to signs that the economic recovery is deepening.
Meanwhile, Standard & Poor's cut the European Union's long-term credit ratings to 'AA+' from 'AAA' on Friday, citing concerns that E.U.'s financial profile has deteriorated while cohesion among E.U. members has lessened, though the euro shrugged off the news.
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German Import Price Index rises more-than-expected
Germany’s import price index rose more-than-expected in the last quarter, official data showed on Monday.
In a report, Destatis said that German Import Price Index rose to a seasonally adjusted 0.1%, from -0.7% in the preceding quarter.
Analysts had expected German Import Price Index to rise to -0.2% in the last quarter.
Dutch economic growth revised upwards
he Netherlands' economy grew slightly faster than previously estimated in the third quarter, revised data showed Tuesday.
Gross domestic product grew 0.2% in the third quarter from the previous three months, statistics bureau CBS said in its second estimate. The previous figure, released in November, estimated the economy expanded by 0.1%.
On a yearly basis, GDP was down 0.4%, compared to a previous estimate of a 0.6% decline.
The euro-zone's fifth-largest economy emerged from a year-long recession in the third quarter. An increase in exports, which helped offset a decline in household consumption, CBS said.
The Netherlands, which accounts for about 6.3% of the euro-zone economy, had been stuck in a recession since the second half of 2012, largely due to sluggish domestic demand.
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French Debt To GDP Ratio Declines In Q3
France's debt to gross domestic product ratio fell to 92.7 percent in the third quarter from 93.5 percent in the second quarter, the statistical office Insee said Tuesday.
At the end of the third quarter of 2013, the Maastricht debt reached EUR 1,900.8 billion, a EUR 11.4 billion decrease in comparison to the second quarter.
The State's contribution to the debt dropped by EUR 9.3 billion in the third quarter and the contribution to debt of central agencies went down by EUR 1.3 billion. Local government units contribution to debt remained steady.
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Eurocoin Indicator Continues To Improve In December
An indicator of current economic situation in the euro area remained in positive territory for the fourth consecutive month in December, a report from the Bank of Italy showed Tuesday.
The indicator rose to 0.29 in December from 0.23 in November. The improvement in household and business confidence kept the indicator high despite the less favorable trend in industrial activity.
It provides a reasonably close anticipation of the quarterly growth rate net of the more volatile components.
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France 'to avoid double-dip recession'
France will avoid a recession this year, according to the country's statistics body.
INSEE said the economy will grow 0.4% in the last three months of the year, after contracting 0.1% in the third quarter.
President Francois Hollande has been under pressure to revive the economy as other eurozone nations start growing and show signs of recovery.
The body predicted growth of 0.2% for the whole of 2013.
France was last in recession in the first quarter of this year.
A recession is when an economy shrinks for two consecutive quarters. There were fears of a French "double-dip" recession, where an economy returns to recession after experiencing a short-lived recovery, but the country's statistics agency thinks this will now be avoided.
Europe's largest economy, Germany, has seen much of its economic success during the debt crisis driven by exports. By contrast, INSEE said French exports fell by 1.3% in the third quarter.
French household spending rose by 0.1% in the third quarter.
The government forecasts economic growth of 0.9% in 2014, lowered from a previous 1.2% forecast, with just 0.1% in growth forecast for this year.
France has not had a year of negative growth since 2009.
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