Eur/usd - page 91

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Eurozone April Economic Confidence Falls Unexpectedly

Eurozone economic sentiment weakened unexpectedly in April from a 32-month high as the crisis in Ukraine weighed on confidence in services and construction.

Economic confidence fell to 102 in April from 102.5 in March, survey results from the European Commission revealed Tuesday. The score was forecast to rise to 102.9 in April from March's originally estimated value of 102.4.

The unexpected fall in April might be a warning not to expect too much from the Eurozone recovery and further highlights the risk of deflation in the region, Jessica Hinds, a European economist at Capital Economics said.

Industry confidence fell slightly by 0.3 points to -3.6, reflecting a marked decrease of managers' production expectations, which was mitigated by a brighter appraisal of the level of overall order books and a broadly stable assessment of stocks of finished products.

Services confidence fell by 1.0 points to 3.5 in April. The decline resulted from worsened assessments of the past business situation and past demand, while views on expected demand remained broadly stable.

Consumer confidence improved by 0.7 points to -8.6. The flash estimate for April was -8.7, which was the highest since October 2007. The improvement was driven by consumers' more positive views on the future general economic situation and the level of future unemployment.

Meanwhile, their savings expectations decreased slightly and views on their households' expected financial situation remained broadly unchanged in April.

IHS Global Insight's Chief European Economist Howard Archer said any improvement in Eurozone consumer spending still seems more likely to gradual rather than pronounced over the coming months as there are still significant constraints in most countries.

Consumers' expectations of inflation weakened again in April. Accordingly, the European Central Bank will remain under pressure to take further policy action, Jessica Hinds at Capital Economics said.

Further, the survey showed that the retail trade confidence index slipped by 0.1 points to -2.6 in April. This was the result of an increase in managers' expected business situation, which was canceled out by a more negative assessment of both the volume of stocks and the present business situation.

Confidence in construction declined to -30.3 from -28.7 in March. The decrease in confidence was mainly due to a strong decline in managers' employment expectations, while their assessment of the level of order books remained flat.

Another report from the EC showed that business confidence fell 0.13 points to a 3-month low level of 0.27 in April. The expected score was 0.42.

Managers' evaluation of the past and expected production, as well as of the current level of export order books worsened, while their assessment of overall order books improved and their appraisal of the stocks of finished products remained broadly unchanged.

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Here’s how the ECB will force the euro lower

It is not as if the euro zone is short on problems. The economy is struggling to grow even as the rest of the world hits what is likely to prove the peak of this cyclical recovery. Jobs are not being created, and youth unemployment is crippling. Half the continent is slipping into deflation, worsening its debt crisis.

And yet, on top of that, it has a fresh problem, and one that threatens to make its economic challenges even more insurmountable. A soaring currency.

The euro EURUSD just keeps on rising in value. Back in 2012, when people were seriously worried they might wake up one morning and find the euro had fallen apart overnight, it went all the way down to 1.20 to the dollar. It looked as if it might dip below parity, as it did shortly after the single currency was launched. But ever since then, it has been climbing steadily, rising all the way back to 1.39.

That is way too high.

It is going to crucify Europe’s already hard-pressed exporters. It pushes down prices, increasing the risk of the continent tipping into full-scale deflation. And it throws away the opportunity to claw back competitiveness for the peripheral economies.

The European Central Bank is likely to launch a three-part campaign to get the currency back down again, including lots of talk, direct intervention, and finally printing money. Investors have been piling into European assets all through this year — but as the currency comes under inevitable pressure they will be facing big losses.

Ever since its launch, the euro has been a volatile currency. Just before the financial crash, it went above 1.55 to the dollar, and in 2011 it was up to 1.45. But it has also been down at the 1.20 level in 2005, 2010 and 2012. Hardly surprisingly, at the depths of the euro-zone crisis, with Greece, Portugal and Ireland going bust, and Italy and Spain looking likely to join them, investors were about as keen to hold the currency as they are on rubles right now.

The steadying of the euro ever since the ECB President Mario Draghi promised to do whatever it took to save the currency has bought it back into the club of acceptable assets and it has been rising ever since.

Why is the euro so strong on the currency markets?

There are three reasons. The first is that investors have been piling into euro-zone stocks and bonds as the region recovers — stronger demand means the price of the currency goes up.

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Interesting and very useful article.

 

Euro recovers as inflation eases pressure on ECB

The euro recovered and the currency bloc's government bonds retreated on Wednesday after euro zone inflation stayed just about strong enough to suggest the European Central Bank will take no action when it meets next week.

Euro zone inflation nudged up to 0.7 percent in April preliminary figures showed, and though it remained well below the ECB's target rate of just below 2 percent the figure is likely to come as a relief to the bank after a weak reading out of Germany on Tuesday.

With investors also awaiting the outcome of a U.S. Federal Reserve meeting and further developments in Ukraine, a cautious market mood kept the euro under pressure in the run-up to the data.

Its release lifted the shared currency to a session high of $1.3824 as market chatter of a rate cut or alternative easing measures faded.

ECB head Mario Draghi said last week that if the inflation outlook were to deteriorate, the ECB could respond with a "broad-based asset purchase programme", probably quantitative easing - effectively printing money to buy assets.

On Monday, however, he told lawmakers from Germany's ruling coalition that while low inflation would persist in the euro zone, he did not expect deflation, according to a source who attended the meeting.

"The two important data for the ECB, inflation today and M3 (money supply) yesterday came in on the weak side which means the ECB is really under pressure, the problem is they have been under pressure for a while," said Philippe Gudin de Vallerin head of euro research for Barclays.

"They are definitely not complying with their mandate... The key is the euro, they really need to weaken the euro but it is not easy."

Euro zone government bonds across the spectrum from Germany and France to Greece and Portugal also switched direction, with prices reversing as the prospect of steady ECB rates reheated concerns about their current value for money.

European stocks took a breather, having jumped to a near four-week high on Tuesday thanks to combination of strong earnings, merger moves and relief at the mild tone of sanctions imposed on Russia by the West.

Shares in French conglomerate Alstom stood out. They jumped 8 percent after the firm said it would review an offer from General Electric for its energy business and left the door open for a rival bid from German giant Siemens .

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German April Unemployment Falls More Than Forecast

German unemployment declined more-than-expected in April, indicating that economic recovery pushed companies to hire more staff.

The number of people out of work declined 25,000 from March to 2.872 million in April, the Federal Labor Agency reported Wednesday. This was the fifth consecutive decline in unemployment.

Economists had forecast unemployment to decrease by 10,000 in April. Although a decline is common in winter, April's fall was relatively strong. This demonstrates the positive economic conditions, the agency said.

The jobless rate remained unchanged at a seasonally adjusted 6.7 percent in April, in line with expectations.

Data published by the statistical office earlier in the day showed that the ILO unemployment rate held steady at 5.1 percent in March. The number of unemployed declined to 2.19 million from 2.20 million in the previous month.

According to Markit Economics' Purchasing Managers' survey, German private sector companies hired additional workers in April to meet increased business requirements. The rate of job creation accelerated since the previous month.

German firms are still confident about their future activities in April as the risks emanating from the Ukraine crisis left their morale untouched, Ifo survey showed last week.

However, Bundesbank said economic growth will lose momentum in the second quarter after a strong start to the year. The bank cited the surge in industrial orders as the reason for strong growth in the first quarter.

Retail sales fell unexpectedly in March, Destatis reported today. Sales were down 1.9 percent from last year, offsetting February's 1.9 percent increase.

This was the first decline since December. The Easter sales fell last year in the month of March, while this year it was in April.

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Denmark Jobless Rate Lowest Since June 2009

Denmark's unemployment rate dropped further in March to its lowest level since the middle of 2009, Statistics Denmark said Thursday.

The seasonally adjusted jobless rate fell to 5.1 percent from 5.3 percent in February. It is the lowest figures since June 2009, the agency said.

The number of unemployed fell by 4,000 persons to 135,800. From December 2013, unemployment has fallen by 12,500 persons.

In March, the youth jobless rate, which applies to the 16-24 age group, fell to 3.5 percent from 3.6 percent in the previous month.

 

New Greek three-year fiscal plan forecasts rapid recovery

Greece on Wednesday presented a three-year fiscal plan forecasting further improvement in the underlying budget surplus, a major fall in unemployment and real growth of 3.2 percent by 2018.

"The main target of the plan is to keep Greece in high primary surplus for a long period to come," the ministry said.

The primary surplus is the budget balance without interest, support for banks and other payments.

The medium-term framework of fiscal strategy for 2015 to 2018 foresees across-the-board recovery in economic indices.

However, the ministry notes that political upheaval could adversely affect the forecasts.

Early elections are likely to be held in Greece by early 2015 when the term of President Karolos Papoulias ends.

The primary surplus will be 2.3 percent of output in 2014 and 5.3 percent by 2018.

The surplus was 0.8 percent in 2013, a first in over a decade.

The unemployment rate will fall from 24.5 percent in 2014 to 15.9 percent in 2018.

After a six-year recession, real output will rise from 0.6 percent this year to 3.7 percent in 2016 and 3.2 percent in 2018.

The pace of privatisation is to accelerate, with 1.5 billion euros in proceeds in 2014, 2.2 billion in 2015, 3.2 billion in 2016, 2.8 billion in 2017 and nearly 3.0 billion in 2018.

The Greek public debt is to be reduced from nearly 317 billion euros this year to 301.8 billion in 2018, or 139.1 percent of output.

Civil service staff cuts will continue, but the number of new hirings will progressively rise.

There will be over 21,000 layoffs and voluntary departures this year and some 14,000 hirings. In 2018, there will be 15,300 layoffs and 17,600 hirings.

The main opposition Syriza party criticised the reduction of the health ministry budget by some 300 million euros by 2018. The education ministry budget will also be cut by some 700 million euros.

"Not only is the humanitarian crisis (in Greece) not being addressed, but there are no plans to compensate those who bore the brunt of the sacrifice," shadow finance minister Euclid Tsakalotos said in a statement.

The fiscal plan is to be submitted to a vote in parliament on May 9.

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European stocks mixed to lower after Spanish PMI; Dax down 0.14%

European stocks were mixed to lower on Friday, weighed by the release of disappointing Spanish manufacturing data, while investors eyed an upcoming U.S. nonfarm payrolls report to be published later in the trading session.

During European morning trade, the DJ Euro Stoxx 50 slid 0.35%, France’s CAC 40 declined 0.44%, while Germany’s DAX fell 0.14%.

Markit research group said Spain's manufacturing purchasing managers' index ticked down to 52.7 in April, from a reading of 52.8 the previous month, compared to expectations for a rise to 53.4.

Meanwhile, global equitiy markets remained under pressure after the Federal Reserve on Wednesday said it would reduce its bond purchases by $10 billion to a total of $45 billion a month, in a widely expected decision.

Investors were looking ahead to the upcoming April nonfarm payrolls report, which was expected to show that the recovery in the labor market was continuing.

Financial stocks were mixed, as BNP Paribas (BNPP.PARIS) plummeted 2.24% and Societe Generale (SOGN.PARIS) gained 0.54% in France, while Germany's Deutsche Bank (DBKGn.XETRA) slid 0.41%.

Among peripheral lenders, Intesa Sanpaolo (ISP.MILAN) dipped 0.01% and Unicredit (CRDI.MILAN) advanced 0.58% in Italy, while Spanish banks Banco Santander (SAN.MADRID) and BBVA (BBVA.MADRID) shed 0.16% and 0.53% respectively.

Elsewhere, Pernod Ricard (PERP.PARIS) was down 0.06% after saying it doesn't plan to acquire additional wineries in the U.S. following last week’s agreement to buy Kenwood Vineyards in California.

In London, FTSE 100 inched up 0.08%, led by the Royal Bank of Scotland (RBS.LONDON), whose shares surged 10.18%, after the bank said its first quarter-profit tripled as impairments fell and its Irish unit posted its first profit since the financial crisis.

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Euro zone unemployment rate 11.8% vs. 11.9% forecast

The unemployment rate in the euro zone remained unchanged unexpectedly last month, official data showed on Friday.

In a report, Eurostat said that the rate of unemployment remained unchanged at a seasonally adjusted 11.8%, from 11.8% in the preceding month whose figure was revised down from 11.9%.

Analysts had expected the unemployment rate to remain unchanged at 11.9% last month.

 

EUR/USD drops after strong U.S. nonfarm payrolls data

The euro dropped against the U.S. dollar on Friday, as the release of strong U.S. employment data fuelled optimism over the strength of the country's economic recovery, sending the greenback broadly higher.

EUR/USD hit 1.3818 during European afternoon trade, the pair's lowest since Wednesday; the pair subsequently consolidated at 1.3819, shedding 0.35%.

The pair was likely to find support 1.3778, Wednesday's low and resistance at 1.3889, Thursday's high.

The Labor Department said the U.S. economy added 288,000 jobs in April, beating expectations for a 210,000 increase. March's figure was revised up to a 203,000 rise from a previously estimated 192,000 gain.

The private sector added 273,000 last month, more than the expected 210,000 rise. In March, the number of private sector jobs was revised up to a 202,000 increase a previously estimated 192,000 rise.

The report also showed that the U.S. unemployment rate fell to 6.3% in April, from 6.7% the previous month, compared to expectations for a fall 6.6%.

The euro was little changed against the pound, with EUR/GBP dipping 0.05% to 0.8206.

In the euro zone, data showed that the unemployment rate remained unchanged at 11.8% in March, confounding expectations for a rise to 11.9%. March's figure was revised down from a previously estimated rate of 11.9%.

Separately, Markit said Germany's manufacturing purchasing managers' index slipped to 54.1 last month, from a reading of 54.2 in March. Analysts had expected the index to remain unchanged in April.

In Italy however, the manufacturing PMI rose to a 35-month high of 54.0 last month, from a reading of 52.4 in March, while Spain's manufacturing PMI ticked down to 52.7 in April, from a reading of 52.8 the previous month.

The final euro zone manufacturing PMI ticked up to 53.4 in April, from 53.3 in March. Analysts had expected the index to remain unchanged last month.

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