Eur/usd - page 231
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is the pair going to 1.00000 ?
EUR/USD finally falls out of range – more to come?
EUR/USD was stuck in a narrow range throughout February. However, in the penultimate day of the month, the pair finally moves lower and trades at the lowest since January 27th.
The trigger was a one-two punch from the US: bullish words from Bullard and solid inflation data, that emerged as a winner from a big bulk of figures.
James Bullard, the president of the Saint Louis Fed, referred to both sides of the currency: he said the strong dollar will only have a marginal effect on growth. And, he added that the ECB’s QE is likely to push the euro further to the downside.
We have mentioned in the past that once the Greek story is moved to the back burner, there is still this monetary policy divergence issue which weighs on the pair.
Janet Yellen was perceived as dovish, but she was actually preparing markets on for a removal of forward guidance in March.
With core inflation at 1.6% and job creation still solid, a June hike is still on the table.
EUR/USD dropped below support at 1.1270 and reached a low of 1.1237. Further support awaits at the round number of 1.12, followed by 1.11. On the topside, 1.1270 turns into resistance, followed by 1.1373 and 1.1460.
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ECB QE Won't Reach Inflation Target: Reuters Poll
Only 43 of 83 economic experts said in a poll conducted this week by Reuters that the European Central Bank's (ECB) quantitative easing program (QE) would succeed in bringing inflation back to the central bank's target of just below 2% percent.
The program is scheduled to start in March, with the buying of €60 billion euros worth of sovereign bonds a month, to ease deflation trends spreading in the single currency area. The ECB is expected to expand its balance sheet by about €1.1 trillion by the end of 2016, matching its level of early 2012.
Euro zone inflation turned negative in December for the first time since 2009, helped by a sharp fall in global oil prices. Consumer prices registerd a further decline in January. ECB President Mario Draghi has warned that inflation in the euro zone could stay very low, or negative, for months.
Economist polled in the survey were concerned that fiscal austerity and very high unemployment leave too much slack in the economy, despite some timid signs of economic recovery. Stronger optimism in recent business surveys and the latest economic growth data have helped European stock markets reach multi-year highs.
Economists sceptical
"We are skeptical about the impact of QE. I am not saying that it won't work at all, but it would be relatively ineffective," Reuters cited Elwin De Groot, senior euro zone economist at Rabobank. "The monetary mechanism is still not functioning as it should ... basically what you need is not just a monetary policy impulse, but also a more real economic impulse."
"Although the current negative inflation rate is largely due to sharp declines in energy prices, at +0.6 % the 'core' measure represents a series low," Philip Shaw, an economist at Investec, said in the same poll. "Clearly it is likely to take some time before domestic demand pushes inflation back to the target."
Moreover, the economists are not convinced QE will spur lending and lift the real economy by fueling demand, as the liquidity injections by the ECB in 2012 did not materially improve loans to the private sector at that time.
"You need a certain degree of religious fervour to truly believe that the money created by asset purchases directly stokes demand," Shaw argued.
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German Import Price Index -0.8% vs. -1.0% forecast
Germany’s import price index rose more-than-expected in the last quarter, official data showed on Friday.
In a report, Destatis said that German Import Price Index rose to a seasonally adjusted -0.8%, from -1.7% in the preceding quarter.
Analysts had expected German Import Price Index to rise to -1.0% in the last quarter.
EURUSD plunged during yesterday session breaking below the consolidation channel at 1.1270 and closed near the low of the day. The pair may develop a downward trend towards a Fibonacci extension at 1.1018. We may see a pullback to the previous support, now turned to resistance at 1.1270 before another leg down.
Italy's CPI Back in Expansion in February
Consumer prices in Italy showed some improvement compared to the previous month, the country's statistics office (Istat) reported on Friday, as the euro area's third-largest economy continues to struggle to overcome recession trends.
The CPI for February advanced 0.3% month-on-month, after a steep fall into contraction territory in January, Istat said. Market analysts had expected a 0.1% increase in consumer prices.
Measured in annual terms, meanwhile, the CPI declined 0.2%, compared to expectations that it would contract 0.5%.
Retail sales turn negative
On Thursday, data from Istat showed Italian retail sales fell into negative territory on a monthly basis after a slight expansion seen in the previous month.
Consumer spending at retailers ticked 0.2% lower in December on a month-on-month basis, the National Institute of Statistics (Istat) reported on Thursday.
On the other hand, a separate report revealed confidence in Italy's manufacturing sector staged a major rebound in February, with the Manufacturing Confidence Index increased to 99.1 in February, from the 97.6 measured a month ago.
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EUR/USD rises after positive French, Spanish data
The euro rose against the U.S. dollar on Friday, supported by positive French and Spanish data, while markets eyed the release of highly-anticipated U.S. economic reports due later in the day.
EUR/USD hit 1.1243 during European afternoon trade, the session high; the pair subsequently consolidated at 1.1225, rising 0.24%.
The pair was likely to find support at 1.1097, the low of January 26 and resistance at 1.1380, Thursday's high.
Official data earlier showed that French consumer spending rose 0.6% last month, confounding expectations for a 0.5% fall. December's figure was revised to a 1.6% increase from a previously estimated 1.5% gain.
A separate report showed that Spanish consumer prices slipped at an annualized rate of 1.1% this month, compared to expectations for a 1.5% drop, after a 1.3% fall in January.
But investors remained cautious amid lingering doubts over the agreement to extend Greece’s bailout after both the International Monetary Fund and the European Central Bank warned that the country's reform plans are not detailed enough.
Meanwhile, sentiment on the dollar remained vulnerable after the U.S. Department of Labor reported on Thursday that the number of individuals filing for initial jobless benefits increased by 31,000 to 313,000 last week from the previous week’s revised total of 282,000.
Data also showed that U.S. consumer prices declined 0.7% last month, compared to estimates for a decline of 0.6%, while core consumer prices, which exclude food and energy costs, increased by 0.2% in January, above expectations for a 0.1% increase.
On a more positive note, the U.S. Commerce Department said that total durable goods orders increased by 2.8% last month, above expectations for a gain of 1.7%, while core durable goods orders, excluding volatile transportation items, inched up 0.3% in January, disappointing forecasts for a 0.5% gain.
The euro was little changed against the pound, with EUR/GBP at 0.7270.
Later in the day, the U.S. was to release revised data on fourth quarter growth, as well as reports on pending home sales, business activity in the Chicago region and consumer sentiment.
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Euro sags after bump into the fix
Fixing demand is fading
There was talk about USD selling into the fix and that has proven to be true. The euro and pound hit session highs into the fix but have sagged since.
After touching 1.1227, EUR/USD is back down to 1.1188. That would be the lowest daily, weekly and monthly close since Q2 2009.
a lot of mixed data today in the US stopped the dollar from continuing the uptrend against the Major currencies
EUR/USD: Euro Finally Breaks $1.13, US Data Help Over Week
The main currency pair in the world has been stuck in a tight range for a couple of weeks and has been trading at $1.1350 practically the entire time during that period. This has now come to an end, as the pair broke below the $1.13 support and bears are once again in control of the market. The shared currency fell 1.63% over the week and closed at $1.1196, determined to test the current cycle low at $1.11.
Boring trading continued until Thursday, with the pair oscillating around $1.1350, and every rally closer to the $1.14 mark was aggressively stopped and sold-off.
Yellen's testimony
US Federal Reserve Chair Janet Yellen's testimony indicated that policymakers may decide to drop the reference to "patience" from their forward guidance at next month's meeting.
On Wednesday Chair Yellen continued her testimony before the House Committee on Financial Services, repeating that the US central bank plans to change forward guidance before rates rise.
However, the market did not receive the testimony as positive, and the dollar was offered as Yellen failed to provide more concrete details and discussed largely the same things that investors had seen in the last FOMC minutes. Drops in the dollar price were seen by investors as better entry points and therefore the dollar was bought on dips.
Moreover, Yellen emphasized that the rate hike is still data dependent rather than date dependent, and it was crystal clear from Thursday's market reaction to US data.
US Macro supportive
The US CPI on a yearly basis printed -0.1%, down from last month's 0.8% and core inflation on a yearly basis stayed at the previous level, coming in at 1.6%. Durable goods rose 2.8%, well above January's disappointing -3.4% and core durable goods printed 0.3%, also higher from last month's decline of 0.8%.
Positive data spurred volatility and pushed the pair below the mentioned support at $1.13, as core inflation did not decrease and market participants priced in the expected rate hike again.
GDP LATER
To conclude, the Greek problems are gone and the market was and is now focusing on the macroeconomic outlook, most notably on the Federal Reserval and the central bank's rate hike prospects.
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