Eur/usd - page 73

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Italy Producer Prices Decline Further

Italy's producer prices continued to fall in January, albeit at a slightly slower pace, figures from ISTAT showed Friday.

Overall producer prices declined 1.5 percent year-on-year, after falling 1.8 percent in both November and December. Prices fell for the eleventh month in a row. The latest decrease was the smallest since July last year, when prices fell 1.3 percent.

Month-on-month, producer prices dropped 0.2 percent in January, following a 0.1 percent decrease in December. It was the fourth successive fall on a monthly basis.

In the domestic market, prices shrunk 1.7 percent annually, after a 2.1 percent slump in the previous month. They declined 0.2 percent monthly, after falling 0.1 percent each in the previous two months.

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Moody's changes outlook on Belgium's Aa3 government bond to stable from negative

Moody's changed its outlook on Belgium's Aa3-rated government bond to stable from negative, citing stabilization of the country's banking sector leading to receding risks on the government's balance sheet.

"The (banking) sector has been strengthened by a decline in legacy issues and in volatility related to the restructuring operations undertaken during the crisis and the authorities' decisive support efforts," the rating agency said in a statement. ()

Moody's also said it expects the government's fiscal position to continue to improve.

The rating agency affirmed Belgium's Aa3/P-1 ratings.

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Forex Analysis: EUR/USD Reaches New Long-Term High before Retreat

EUR/USD (daily chart) reached a new 2+ year high of 1.3914 in early trading on Friday before retreating after the dollar-strengthening US Non-Farm Payrolls report. This high slightly surpasses the previous long-term high of 1.3892 that was established at the end of 2013.

The upside breakout comes after a substantial rally on Thursday, and tentatively confirms a continuation of the generally bullish trend that has been in place since the July low near 1.2750. Within this uptrend, the past month has seen a rebound and steady rise from a pullback that hit a February low of 1.3475, near the key 38% Fibonacci retracement of the bullish trend.

Despite the slight pullback after the U.S. employment report, the general bias currently remains bullish for the EUR/USD. With follow-through on the breakout and continued momentum above 1.3900, the bullish trend would have its next major upside targets around the 1.4000 psychological level and then the 1.4250 resistance level. Key downside support on another pullback continues to reside around the 1.3700 level.

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EUR/USD Forecast March 10-14

EUR/USD had a superb week, riding on the inaction of the ECB to reach levels last seen in 2011. Is it the beginning of a long rally? Industrial production data, Eurogroup and ECOFIN Meetings and inflation data are the highlights of this week. Here is an outlook on the major events and an updated technical analysis for EUR/USD.

After the ECB made no changes in rates, Draghi gave the euro a big boost. as he refrained from taking action to ease pressure on short-term borrowing rates caused by European banks paying back LTRO loans. Some analysts expected Draghi would end sterilization of its SMP program. The lack of news was excellent news for the euro. In the US, Non-Farm Payrolls surprised to the upside, and this stopped the rally, but EUR/USD remains on high ground.

  1. French Industrial Production: Monday, 7:45. France’s industrial production declined 0.3% in December, following a sharp rise of 1.2% in the previous month. Economists expected a smaller drop of 0.1%. Output declined in transport equipment as well as energy products, however motor vehicles went up. French manufacturing showed signs of improvement, but remained in contraction as well as in the service sector. Francoise Hollande’s reform agenda may give the necessary boost to start recovery in the French economy. Industrial production is expected to increase by 0.6%.
  2. Italian Industrial Production: Monday, 9:00. Italian industrial production plunged 0.9% in December, following a 0.3% rise in November. Likewise, Italian Service and Retail sectors remained in contraction, despite some improvement in the manufacturing sector. Italian industrial production is predicted to gain 0.4%.
  3. Sentix Investor Confidence: Monday, 9:30. Investor sentiment in the euro zone increased to 13.3 in February, reaching the highest level since April 2011, following 11.9 in January. Analysts expected a decline to 10.7 in February. Investors were more confident regarding the Eurozone’s economic outlook. Investor confidence is expected to rise to 14.3.
  4. Eurogroup meetings: Monday. The Eurogroup, an informal body includes Member States using the euro currency. It meets normally the day before the Ecofin meeting in Brussels and deals with issues relating to the Economic and Monetary Union (EMU).
  5. German Trade Balance: Tuesday, 7:00. Germany’s seasonal adjusted trade surplus, narrowed less than expected in December to €18.5 billion from a revised €18.9 billion in November. The release was above the €17.3 billion projected by analysts. Both the trade and the current account surplus were above expectations. Meanwhile, German exports in December declined 0.9% from November, but increased 4.6% on a yearly base. German exported mainly to other EU countries, followed by exports to countries outside the single market. Surplus is expected to rise to €19.3 billion.

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Week In FX Europe – Is It Time To Admit EUR Defeat?

The Dollar is supposed to be king - that's what many had been hoping especially with a 'hawkish' Fed and a 'dovish' ECB running the show. Interest rate differentials are suppose to pull the "mighty" dollar higher against the 18-member single currency. If you ask a EUR bear, especially this week, you probably get the most frustrated of responses - they have been waiting patiently for most of this year to reap some reward from their 'short' EUR positions. It's not happening anytime soon, especially now after the ECB's reaction and rhetoric of this week's monetary meet-up.

The ECB managed to wrong foot the markets that have been waiting for a response to the Euro-zone's low inflation problem. With rates on hold at +0.25% and Euro policy makers unlikely to provide any monetary stimulus soon, trades that been wagered on a looser policy are bleeding and will only ever support the EUR in the short to medium term. Betting against the single unit looks wrong and has the bleakest of bears nearly raising both their arms in defeat. Trading above the psychological €1.39 pre-NFP on Friday equaled levels last seen in October 2011. Most of the negative trades have been strapped on assuming that the ECB was going to counter their low inflation problem with one of their controversial policies - negative deposit rates or QE. The upbeat message that followed the ECB rate decision from Draghi at his regular press conference post monetary meet, would suggest that neither of the tools would be deployed anytime soon or if ever. Now the bears have to wait and gage the pullback from Friday's positive NFP report. If the USD does not get aggressively brought outright then the EUR bears could be in a heap of trouble - €1.40 and change looks so near!

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Moody’s boosts outlook for Netherlands, Belgium – raised both to stable from negative

Moody`s raised its credit outlook for the Netherlands and Belgium on late Friday:

  • Elevated both to stable from negative
  • The Netherlands kept its top-level Aaa rating - Moody’s said the Netherlands outlook improved because it was less likely to be called on to help fund rescues of weaker eurozone countries, that there were signs that the country`s own domestic problems, such as weak growth and high household debt, have peaked “and are likely to evolve in a positive direction”, and also that the fiscal situation has stabilized.
  • Belgium retained Aa3 – citing stabilization of the country’s banking sector leading to receding risks on the government’s balance sheet

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French industrial output falls in January

French industrial production dropped unexpectedly in January, weighed down by a contraction in energy output.

Industrial production in the euro zone's second-largest economy dropped 0.2% in January from December, statistics bureau Insee said Monday. Analysts polled by Dow Jones Newswires had expected output to hold at the same level in January.

A steep falls in energy output masked an improvement in manufacturing output, which rose 0.7% in January from December, and manufacturing output was 0.4% higher in the last three months than in the previous three months. Over the same period, industrial output across all sectors rose 0.3%, Insee said.

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Eurozone Sentix Investor Confidence At 35-Month High

Eurozone investor confidence reached its highest level since April 2011 in March, underpinned by a notable improvement in the current situation assessment, a survey conducted by the think tank Sentix showed on Monday.

The composite confidence index rose to 13.9 from 13.3 in February, while economists had forecast it to rise to 14. However, it was the highest score since April 2011.

The assessment of current situation climbed to 4.8, the highest since July 2011, from 1.8 in February. The current conditions index turned positive in February for the first time since August 2011.

However, the expectations index declined for the first time since September. The score came in at 23.5 in March, down from 25.5 in February.

Although there is a lot of talk about an expectations bubble concerning the euro area, Sentix said the expectations index signals that this bubble does not exist.

Moreover, the gap between economic expectations and investors' assessments of the current situation is becoming ever smaller as expectations are adjusted to the downside.

This might just be a breather, but it could also point to less economics dynamics for the Euro zone in the quarters ahead, said Sebastian Wanke, a senior analyst at Sentix.

The European Central Bank forecasts the 18-nation bloc to grow 1.2 percent this year, before accelerating to 1.5 percent in 2015.

According to a survey from Bank of France, the French economy is expected to expand 0.2 percent in the first quarter of 2014, unchanged from the previous estimate.

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Euro Bullish Sentiment at Fresh Peak – The CFTC Report

The latest report by Commodity Futures Trading Commission (CFTC) covering data up to March 4th shows that the bullish sentiment strengthens towards the Euro as well as net long increases with the GBP. In addition the Swiss Franc bullish bias is being built for one more week. At the same time the negative bias narrowed with the Japanese Yen to $9.7 billion, also the Canadian Dollar negative sentiment moderated by $0.65 billion. Lastly, the bearish sentiment is further built towards the Australian Dollar, with net short position increasing to $3.7 billion.

The Euro had the biggest weekly change for one more week. The net long position increased to $4.03 billion, that took place until March 4th which is earlier than the European Central Bank monetary meeting. Thus, we would most likely see further building of the bullish sentiment on the common currency. The British Pound no longer maintains largest net long position among major currencies; the Euro takes now the lead. However, for another week, the British Pound has the largest Long/Short ratio.

Traders have covered somewhat their short positions on the Japanese Yen and the Canadian Dollar. The Japanese Yen short covering was triggered by increased geopolitical risk due to Ukraine crisis, while Canadian bearish sentiment moderation is most likely influenced by higher energy prices.

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Germany’s Trade Balance 17.2B vs. 17.7B forecast

Germany’s trade balance fell more-than-expected last month, official data showed on Tuesday.

In a report, Destatis said that Germany’s Trade Balance fell to 17.2B, from 18.3B in the preceding month whose figure was revised down from 18.5B.

Analysts had expected Germany’s Trade Balance to fall to 17.7B last month.

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