Eur/usd - page 154
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German July Exports Rise To Record; Imports Fall Unexpectedly
Germany's exports grew more-than-expected in July to a record value, while imports fell surprisingly, lifting trade surplus to higher levels.
Exports climbed 4.7 percent in July from June, when it rose only 0.9 percent, figures from Destatis showed Monday. Shipments were forecast to rise moderately by 0.6 percent. Exports rose to EUR 101 billion, the highest monthly value ever reported.
Meanwhile, imports fell 1.8 percent, reversing the 4.5 percent increase in June. Imports were expected to grow by 0.2 percent.
As a result, the trade surplus rose to a seasonally adjusted EUR 22.1 billion from EUR 16.4 billion in June.
On an unadjusted basis, the trade surplus rose to a record EUR 23.4 billion from EUR 16.6 billion a month ago. Economists had forecast the surplus to increase moderately to EUR 17 billion in July.
Year-on-year, exports rose 8.5 percent, after increasing 1.2 percent in June. On the other hand, imports gained only 1 percent in July, slower than June's 2.1 percent increase.
The current account surplus increased to an unadjusted EUR 21.7 billion from EUR 17.2 billion in the prior month.
The Sentix investor confidence survey released today showed that the sentiment indicator for Germany suggests a clear signal for a downturn in the largest euro area economy. The index dropped to 11.1 in September from 17.9 in August.
The German economy contracted 0.2 percent in the second quarter, which was the first decline since the first three months of 2013.
In its August monthly report, the Bundesbank said geopolitical tensions may weigh on Germany's economic outlook. Sanctions against Russia and counter actions taken by it would affect German exports, the central bank warned.
Nonetheless, official data last week showed that industrial production grew 1.9 percent in July, the most since early 2012. Factory orders increased at the fastest pace in more than a year in July following declines in the previous two months.
source
Interesting elliott wave chart:
thanks for the news
The dollar was almost unchanged or slightly higher compared to their counterparts in the G10, in the absence of relevant economic events. The dollar gained ground against the GBP, NOK and AUD.
The British pound came under great pressure because of the supporters of Scottish independence have taken the lead in the polls.
Anxious EU Leaders Delay Russian Sanctions For "Few Days"
Whether it is confidence in Poroshenko's statements that "the ceasefire is holding" or fears over Russia's threats of "asymmetric" retaliation, Europe's leaders - having convinced the Finns not to veto - emerged from their emergency meeting and declared tough new funding sanctions on Russia's big three oil companies... will be "delayed a few days." It would seem - as we noted earlier - Europe is debating whether or not it can last the winter cold better than Russia can withstand the funding lock.
The suspended provisions include barring some Russian state-owned defense and energy companies -- including OAO Gazprom Neft, OAO Rosneft and OAO Transneft -- from raising capital in the EU, according to a European official who spoke on the usual condition of anonymity
As Reuters reports,
The European Union formally adopted a package of new sanctions against Russia on Monday, but said their entry into force would be delayed to leave time to assess whether a ceasefire in Ukraine is holding.
"The entry into force (of the new sanctions) through the publication in the Official Journal will take place in the next few days. This will leave time for an assessment of the implementation of the ceasefire agreement and the peace plan," EU Council President Herman Van Rompuy said in a statement.
"Depending on the situation on the ground, the EU stands ready to review the agreed sanctions in whole or in part," he said.
EUR/USD settles under 1.29 – Is the pair oversold?
While the fall of EUR/USD is certainly justified from both sides of the pair, we may be on our way for a 9th consecutive weekly decline, and this may be too much.
After stabilizing above last week’s lows of 1.2920 and below the resistance line of 1.2955, the pair slid once again, surrendering to fresh USD strength that was also felt in other pairs.
The dust left by Draghi’s measures (even more rate cuts and also the ABS announcement) did not really settle. A worse than expected NFP in the US provided only a temporary reprieve, and the seemingly stable ceasefire in Ukraine failed to lift the pair either.
A fall of the euro is much needed for the euro-zone: the weaker exchange rate lifts prices of imported goods, thus pushing inflation higher. This is not the “good inflation” that the continent needs, but it makes the ECB’s goal of 2% inflation more realistic.
More importantly, it makes European exports more attractive, and not one minute too late: recent figures have shown that the euro-zone economies stalled. Germany contracted in Q2 and Italy slipped into a recession.
With the ECB about to expand its balance sheet and the Federal Reserve about to stop expanding its own, the fall of EUR/USD is certainly justified.
The pair is still not in the 1.20-1.25 comfort zone, but it’s getting there rapidly.
Nevertheless, isn’t it too fast? Isn’t FX a two way street rather than a one way street?
There seems to be only one way at the moment, without any real bounce, not the “dead cat” type.
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French Trade Balance -5.5B vs. -5.0B forecast
The French trade balance rose less-than-expected last month, industry data showed on Tuesday.
In a report, Ministry of Finance said that French Trade Balance rose to -5.5B, from -5.6B in the preceding month whose figure was revised down from -5.4B.
Analysts had expected French Trade Balance to rise to -5.0B last month.
EURUSD is trading under 1.29, continuing the downfall. The pair reached a low of 1.2881 yesterday. The latest leg down can be associated with strength of the greenback that reached high levels against many other currencies.
The dollar has been unchanged against most pairs the G10. Only depreciated against the AUD and GBP, in that order.
The GBP appreciated with data from Industrial Production and Trade Balance of the country for July
Fears that Scotland vote may inspire Catalonia lift Spanish yields
Spanish bond yields spiked on Tuesday on investor worries that a strong showing for secessionists in Scotland's independence vote could strengthen other separatist bids in Europe such as that in Spain's wealthy Catalonia region.
Pro-independence voters in Scotland are neck-and-neck with those who want the country to remain part of the United Kingdom ahead of a referendum on Sept. 18.
With Catalonia planning a referendum of its own in November - although one not recognised by the Madrid government - investors see Spain as vulnerable should a Scottish breakaway embolden other independence movements.
The "Yes" campaign in Scotland has gained significant ground in the past week and resonances in Spain may intensify as Catalonia's Sept. 11 national day approaches.
"It's pretty obvious now that ... investors are increasingly focusing on Catalan plans for ... independence, with the movement in Scotland having gained so much ground in the past few days," DZ Bank rate strategist Christian Lenk said.
Spanish 10-year bond yields rose 12 basis points to 2.21 percent, retreating further from record lows of 2.045 percent hit last week. Other euro zone yields rose 5-7 bps, with Spanish bond underperforming for a second day.
The cost of insuring against a Spanish default rose, with five-year credit default swaps up 6 bps at 61 basis points while Italian CDS were 4 bps higher at 88 bps, according to data monitor Markit. Both are a fraction of the eye-watering levels above 500 bps reached at the height of the euro zone debt crisis in mid-2012.
While the Constitutional Court Tribunal in Barcelona is expected to veto the Catalan referendum next month, the focus on political developments is prompting some in the market to favour Italian debt over Spanish, unwinding the latter's recent sharp outperformance.
"Whichever way events unfold in Barcelona, we see major headline risks for Spain, starting this Thursday. We therefore go tactically long Italy versus Spain on spread compression and risks stemming for Catalan politics," RBS strategists said.
But Rabobank strategists said Spain's underperformance over UK gilts suggested much of the selling pressure reflected "a heavy dose of profit-taking" after a rally that pushed yields to record lows just above 2 percent.
As such, investors are in fact attaching a much smaller risk premium to Spanish bonds than the market moves suggest.
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