Eur/usd - page 57
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S&P revises Ukraine's long-term outlook to stable from negative
Ratings agency Standard and Poor's said on Thursday it revised the outlook on Ukraine's long-term sovereign 'B-' rating to stable from negative, citing reduced external and fiscal funding challenges thanks to the recent financial aid from Moscow.
"The stable outlook reflects our view that the $15 billion in direct financing, which Russia announced... should cover (Ukraine's) government's external financing needs over the next 12 months," it said in a statement.
Russia agreed to bail out Ukraine by purchasing its sovereign bonds after Kiev performed a sharp foreign policy U-turn and shelved plans to sign deals on political association and free trade with the European Union in late November.
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This Is Not The European Recovery You Were Looking For
As US and European stocks glide effortlessly higher, even the most ardent of US bulls has begun to realize things are getting out of hand. In order to keep his AUM flowing (and afford the next yacht), the friendly local asset gatherer will offer insights like... "there is value overseas" or "Europe is cheap" in hopes that his audience is none the wise as to the true state of affairs elsewhere in the world, let alone in the US. The truth, the gap between US and European earnings has never been wider and with 3 (or 4) false dawns already, European earnings (supposedly the true mother's milk of the stock market) continue to fall - as the strong 'whatever-it-takes' EUR does nothing but stymie their recovery.
S&P 500 earnings are 14% above their 2007 peak while euro-area profits are 53% below their all-time high in March 2008 (of course, this is not firm EBITDA but earnings per share - which is a mirage of low-credit-cost buyback-driven float shrink in some nations of the world... but still)
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Dutch Producer Confidence At 30-Month High
Dutch producer confidence climbed to its highest level in two-and-a-half years in December, the latest report from Statistics Netherlands showed Tuesday.
The headline producer confidence index rose to -0.1 in December from -0.4 in November. This was the highest reading since June 2011, according to the latest data.
Firms' assessment of stocks of finished products improved with the corresponding indicator rising to 3.1 in December from 0.6 in November.
Manufacturers' expectations about the future business activity, however, weakened slightly in December with the corresponding index falling to 3 from 3.4 in November. Their opinion about order books were also less optimistic. The relevant index fell to -6.3 from -5.1 in the previous month.
France Registered Jobseekers Rose 17,800 In November
The number of unemployed in mainland France rose by 17,800 in November, the Labour Ministry said Thursday.
The number of registered jobless seeking full-time employment climbed to 3.293 million in November, the ministry said. The November jobless total was was up 0.5% from a month earlier and 5.6% from a year ago.
Labor Minister Michel Sapin said in a TV interview Monday that France was winning the war on unemployment but he cautioned that progress would be uneven.
"This is a battle that we are engaged in and we are winning step by step, month after month," he said. "There will be months when it will be a little higher," Sapin said, but overall "the number of unemployed will continue to decline in the months to come."
President Francois Hollande has made reversing the upward trend in unemployment the lynchpin of his economic policy, but most observers do not believe it can happen quickly. The national statistics institute Insee forecast last week that France's unemployment rate will be 11% in the second quarter of 2014, up from 10.9% currently.
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Euro lifted as banks look to shore up balance sheets
The euro pushed towards a two-month high against the dollar on Friday as banks adjusted positions ahead of the year end.
The European Central Bank is conducting an asset-quality review (AQR) which could show that banks require more capital, and which will take a snap-shot at year-end 2013, and this has led to some demand for euros to help shore up their balance sheets, traders said.
"There's a lot of attention on the AQR, and there's some positioning ahead of the end of the calendar year," said John Hardy, FX strategist at Danske Bank in Copenhagen.
The euro gained 0.8 percent to $1.3795, just short of a two-month high of $1.3811.
It has risen more than seven percent from a low hit in July, as the euro zone economy came out of a recession triggered by its debt crisis.
The European Central Bank has not been expanding its balance sheet actively unlike its U.S. and Japanese counterpart, giving an additional boost to the euro.
The yen touched a five-year trough against the dollar and euro, dented by a renewed appetite for risk which lifted U.S. and German equities to record highs and weighed on the low yielding currency.
The Japanese currency is on course to post its ninth consecutive week of falls against the dollar, the longest such period since 1974, when the country was suffering from the aftermath of the oil crisis that started the previous year.
Many economists expect inflation in Japan to peak soon, forcing the Bank of Japan to take additional easing steps early next year, as the economy is likely to face headwind from a sales tax hike in April.
"It looks as if there may be more ahead in terms of easing," said Geoffrey Yu, currency strategist at UBS.
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Spain October Current Account Surplus Rises
Spain's current account surplus in October increased from a year ago, helped mainly by improvements in the current transfers, services and goods trade balances, the Bank of Spain said on Friday.
The current account surplus surged to EUR 1.714 billion from EUR 422.7 million in the same month last year. In September, the surplus was a revised EUR 146 million. Spain has logged surplus in the current account since May.
The deficit in the current transfers account shrunk significantly to EUR 185.5 million from EUR 528.3 million. The surplus in the services trade grew to EUR 4.540 billion from EUR 3.627 billion a year ago.
The merchandise trade deficit narrowed to EUR 921.6 million from EUR 1.087 billion. Exports increased 2.5 percent, while imports rose 1.7 percent.
Greek Producer Prices Decline For Fifth Month
Industrial producer prices in Greece decreased for the fifth consecutive month in November, but at a slower pace than in the previous month, data released by the Hellenic Statistical Authority revealed Friday.
The producer price index dropped 0.7 percent annually in November, marking the fifth fall in a row. This followed a 1.6 percent decrease in October.
Output prices of goods meant for the domestic market dropped 0.4 percent year-on-year, and non-domestic market prices declined by 1.8 percent.
Among industrial sub-sectors, prices of intermediate goods fell 2.7 percent from a year earlier, and energy prices dropped 5.3 percent. These declines were partially offset by a 0.2 percent rise in the costs of capital goods and a 2.8 percent gain in non-durable consumer goods prices.
Output prices remained unchanged compared to October, when they recorded a 0.9 percent fall, the agency said.
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Euro Rallies on Optimism Region’s Economic Growth Will Improve
The euro rallied for the sixth time in seven weeks on optimism the region’s economy will continue to rebound from contractions in 2012 and 2013 following the financial crisis.
The 17-nation currency gained as the current-account surplus widened to 21.8 billion euros ($30 billion) in October, the highest since 1997, while a report on Jan. 2 is forecast to confirm that euro-area factory output grew at a 31-month high in December. Brazil’s real surged as traders speculated central-bank intervention will prevent it from falling further after tumbling 2.4 percent the previous week. Turkey’s lira fell to a record amid concern a showdown between the government of Prime Minister Recep Tayyip Erdogan and the judiciary will worsen.
“Europe is running a large trade surplus -- the moves could be also reflective of that,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a phone interview. “Late-in-the-year balance-sheet adjustments related to trade flows” also bolstered the currency, he said, adding “the euro is overvalued at these levels.”
The euro climbed 0.6 percent to $1.3749 this week in New York, and reached 1.3893, the highest since October 2011. The euro rallied 1.6 percent to 144.59 yen, a seventh straight week of gains, while the Japanese currency fell 1 percent to 105.17 per dollar, its ninth weekly drop, the longest streak since February.
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Europe Week Ahead: EZ M3, UK PMI
UK PMI manufacturing will likely rebound again in December. A print in excess of 59 (versus 58.4 in November) looks likely given the strong increases in the forward looking output component (from 58.8 to 61.4) and the new orders (from 61.3 to 64.6). We expect the PMI manufacturing to increase to 59.2, which would be its highest level since February 2011 and would suggest overall growth of around 1.2% QoQ in Q4 unless the PMI services contracts unexpectedly.
Eurozone money and credit growth has clearly disappointed in recent months and November data will likely remain subdued although base effects could support the YoY figures. Deleveraging pressures can be expected to be felt until the turn of the year, when the picture of the banks’ balance sheets will be taken for the Asset Quality Review. Still, in 2014 at the latest, we would expect the pace of contraction in bank credit supply to the private sector to ease further as both supply-side and demand-side constraints are being reduced. A less negative credit impulse, in turn, should support a recovery in Eurozone domestic demand.
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Bundesbank chief presses Europe to pursue reforms
Germany's central bank president is pressing struggling European countries to keep pursuing economic reforms and voicing concern that ultra-low interest rates could in the long term lighten pressure on politicians to stay the course.
Bundesbank chief and European Central Bank governing council member Jens Weidmann was quoted as telling Saturday's edition of German daily Bild that financial markets have calmed but "the crisis can flare up again." He said Europe needs "endurance and strong will" to see through its reform course.
The ECB has cut its main interest rate to a record-low 0.25 percent and may take further action amid economic weakness and low inflation. Weidmann, an anti-inflation hawk, said low rates are justified but cautioned that "low price pressure cannot be a warrant for loosening monetary policy at will."
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