Eur/usd - page 192
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I think this week will be more fundamentally more than technically on the EUR/USD, I don't think any analysis based on technical signal will be good this week as there are a lot of very strong data coming out until thursday
EUR / USD continued its recovery on Monday.
Looking at the daily momentum studies, we still see positive divergence between them and the price action, which stimulates thinking that is coming soon a new fall confirming the downward trend in the long run.
R3 - 1.25900
R2 - 1.25382
R1 - 1.25051
Daily Std. Pivot - 1.24533
S1 - 1.24202
S2 - 1.23684
S3 - 1.23353
http://bewayopa.wordpress.com/
Most US data came in better than expected, with 3rd quarter GDP revised up to 3.9% on a 3.3% expectation.
Consumer spending was also better than expected, but consumer confidence came in weaker than expected which markets fear could bode poorly for the important holiday shopping season.
EURUSD has steadily climbed before and after the news, but with the long-term trend bearish and the GDP data better than expected we continue looking to get short on a rally to the underside of the former bearish channel (around 1.25).
Euro touches day's lows after ECB easing comments
The euro slid to session lows on Wednesday after a senior European Central Bank official indicated that it could begin implementing quantitative easing measures as soon as the first quarter of next year.
EUR/USD touched session lows of 1.2444 and was last down 0.15% to 1.2454.
The single currency has come under pressure in recent months amid heightened expectations that the ECB is moving closer to implementing additional easing measures to spur growth and inflation in the euro area.
ECB vice-president Vitor Constancio said Wednesday that such a move would be a “purely monetary policy decision”, within the ECB’s “mandate and our legal competence”.
He added that the bank could act before the end of this year or in the first quarter of 2015.
Investors were looking ahead to a string of U.S. economic reports due out later Wednesday, including data on initial jobless claims and new home sales ahead of Thursday’s Thanksgiving Day holiday.
The dollar turned broadly lower on Tuesday after lackluster data on consumer confidence and house price inflation offset a report showing that U.S. economic growth was far stronger than initially estimated in the third quarter.
The Conference Board reported that its consumer confidence index fell to a five month low in November, one month after touching its highest level in seven years, as optimism over the short term outlook waned.
Another report showed that U.S. house prices rose more than expected on a year-over-year basis September, but were unchanged on a monthly basis.
Demand for the dollar continued to be underpinned after a separate report showed that the U.S. economy posted growth of 3.9% in the three months to September, far higher than the initial estimate of 3.5%.
The single currency was also lower against the yen and the pound, with EUR/JPY down 0.32% to 146.67 and EUR/GBP losing 0.31% to trade at 0.7916.
In the U.K., data on Wednesday showed that third quarter growth was in line with the preliminary estimates released last month, but indicated that the recovery was less balanced.
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EUR / USD was taken by bears after finding resistance at 1.2440, but found the bulls close of 1.2400.
The RSI moved above its line 50, while the MACD, although within your negative territory, is above its signal line.
The recovery may continue, however, in daily chart remains the downward path.
R3 - 1.25900
R2 - 1.25382
R1 - 1.25051
Daily Std. Pivot - 1.24533
S1 - 1.24202
S2 - 1.23684
S3 - 1.23353
EURUSD initially fell during the course of yesterday session, but found enough support to turn things back around and breaking back above the 1.25 handle. With today being Thanksgiving, it’s likely that the liquidity will absolutely disappear during the US session, this pair will ultimately make most of its moves during the European session.
German inflation slows to 0.6% in November
Consumer price inflation in Germany slowed in line with expectations in November, underlining concerns over the risk of deflation in the euro area, official preliminary data showed on Thursday.
In a report, the German Federal Statistics Bureau said consumer price inflation accelerated at an annualized rate of 0.6% this month, meeting forecasts and slowing from 0.8% in October.
Month-over-month, German consumer prices were flat this month, in line with expectations, after falling 0.3% in the preceding month.
EUR/USD was trading at 1.2492 from around 1.2485 ahead of the release of the data, while EUR/GBP was at 0.7926 from 0.7922 earlier.
Meanwhile, European stock markets remained higher. Germany's DAX rose 0.6%, the DJ Euro Stoxx 50 picked up 0.55%, France’s CAC 40 advanced 0.35%, while London’s FTSE 100 tacked on 0.2%.
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The dollar has been negotiating high after corrected in recent days.
The euro fell in anticipation of the Euro zone CPI to be released on Friday.
All regional November CPI in Germany were lower except Bavaria, indicating that the national inflation rate is probably lower.
The German unemployment rate was unchanged at 6.6% in November, with the strong labor market.
R3 - 1.26306
R2 - 1.25810
R1 - 1.25423
Daily Std. Pivot - 1.24927
S1 - 1.24540
S2 - 1.24044
S3 - 1.23657
Eurozone data adds pressure on ECB to act
Falling consumer prices in Spain and Belgium, combined with a continued decline in bank lending to businesses across the eurozone, make it increasingly likely that the European Central Bank will soon conclude that more aggressive stimulus measures are needed.
However, there were some signs that there is little immediate danger of the eurozone slipping back into an outright economic contraction, with German unemployment falling, and eurozone business confidence on the rise.
Spain's National Institute of Statistics, or INE, Thursday said that the European Union-harmonized consumer-price index fell 0.5% in November from the same month a year ago, after a 0.2% annual drop in October. Its counterpart in Belgium said prices there fell by 0.11% from November 2013, having risen very slightly in the 12 months to October.
Germany will follow with inflation figures later Thursday, and a measure for the eurozone as a whole will be released Friday.
The consensus forecast of 22 economists surveyed by The Wall Street Journal last week was for a decline in the currency area's inflation rate to 0.3% from 0.4% in October. That would make it the 14th straight month in which inflation was less than half the rate targeted by the ECB, of just below 2%.
The persistence of very low inflation and outright price decreases in some countries, combined with weak economic growth, has led to calls on the ECB to engage in large-scale purchases of eurozone government bonds to minimize the risk of a slide into deflation.
Deflation, usually described as a sustained period of falling consumer prices, makes it costlier for debtors to pay back loans. That is a particular danger for heavily-indebted economies such as Spain.
ECB Vice President Vitor Constancio sent the strongest signal to date on Wednesday that the ECB is prepared to buy government bonds early next year if it decides that more aggressive stimulus measures are needed.
Mr. Constancio's remarks came days after ECB President Mario Draghi put financial markets on alert that the ECB was losing patience with ultralow levels of inflation and was ready to do more.
Speaking at Finland's parliament Thursday, Mr. Draghi said that inflation in the eurozone is "very low" and "is expected to remain at around current low levels over the coming months, before increasing gradually during 2015 and 2016."
He also repeated that should the ECB need to fight risks of too long a period of low inflation, "the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate."
The ECB said Thursday that, compared with the same month a year earlier, bank lending to the private sector continued to fall in October, although at a slightly slower pace than in the previous month. Compared with September, lending to households rose by EUR4 billion ($4.99 billion), while loans to businesses fell by EUR3 billion.
The central bank had hoped to revive lending to business through a program of cheap, four-year loans to banks announced in June, part of a package of stimulus measures that was followed up in September with programs to buy covered bonds and asset-backed securities.
"There is little evidence in this data that the stimulative measures announced by the ECB in June and September are having much positive impact," said Howard Archer, an economist at IHS Global Insight.
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ECB tentatively edges closer to QE in 2015; more EUR weakness likely
The characterisation of Europe as “elderly and haggard” by Pope Francis is an accurate one, but on December 4 the European Central Bank could lay the groundwork to try and revitalise the region’s sagging economy.
If was down to European Central Bank President Mario Draghi, the Eurozone would already be on the receiving end of a substantial quantitative easing programme and likely the EUR would be even weaker than it is now – but Draghi’s time could yet come, as early as December 4th.
Eurozone inflation levels are well below the 2% target at 0.4%, unemployment is stubbornly high at 11.5% and there are worrying signs of potential stagnation taking hold in the Eurozone’s two leading economies – France and Germany. Though there is a welcome stabilisation and even recovery taking place in the region’s peripheral economies.
And though QE might be justified on inflation levels (prices are likely to weaken further on falling commodity prices) – Draghi clearly faces tough opposition within the ECB, hence QE hasn’t happened yet.
One of those leading opponents is Bundesbank President Jens Weidmann who continues to express scepticism and he has allies, such asKlaas Knot of the Dutch central bank. There are concerns over moral hazard (possibly overdone given the massive fiscal retrenchment in the periphery countries) and the fact that it could be illegal.
Weidmann pointed to rules forbidding the ECB from funding governments by buying sovereign debt. Draghi will likely point to yields of sovereign debt in countries such as Spain as being below 2%, to fiscal discipline (Greece has been running primary budget surpluses) and the fact that these countries do not need the ECB’s help to fund themselves. This is about raising inflation.
Lack of dramatic results from current stimulus programmes
The fact is the ECB has concocted a virtual alphabet soup of programmes to push cheap money into banks, it’s trying to revive Europe’s asset backed market and so on … So far none have had had the desired impact and others such as the ABS programme would anyway probably take several years to make an impression. Also, Draghi seems to have agreement that the central bank’s balance sheet can expand by EUR 1 trillion.
But buying sovereign government bonds in the secondary markets will have a very quick impact, such as been seen by the QE programmes conducted in the US, UK and Japan. The former two even have growing economies now.
There will be a choreography leading up to the December 4th meeting, which will influence its outcome.
On November 27, Draghi is due to speak in Helsinki and this is another opportunity for him to signal the ECB’s intentions with regards QE. A positive statement in favour may be a sign that he is winning the argument within the ECB.
On November 28, Eurozone inflation data is released with it forecast to fall to 0.3% from 0.4% now. A fall would likely bolster the ECB’s QE camp – but rise could sway the ‘no’ side at the meeting.
There’s probably a 50/50 chance of a major QE programme being announced on Dec 4. But clearly events are building up for it to happen, so the announcement may come a few months later. The chances of the ECB doing QE in 2015 look increasingly high.
The ECB and BoJ will effectively be replacing the US Federal Reserve and the Bank of England in terms of providing tidal waves of liquidity to the world’s capital markets with the fight against deflation very much alive and well. The EUR and JPY look set for more losses over the H1 2015.
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