Eur/usd - page 11
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German Inflation Unchanged In July
Germany's EU harmonized inflation stayed unchanged in July, contrary to economists' forecast for a slowdown, latest data showed Tuesday.
Inflation, as per the harmonized index of consumer prices (HICP), was 1.9 percent in July, unchanged from the June figure, the Federal Statistical Office said. Economists had forecast inflation to ease to 1.8 percent.
The HICP moved up 0.4 percent compared to June, when it logged a 0.1 percent gain. The index was forecast to grow 0.3 percent month-on-month.
At the same time, the consumer price index advanced 1.9 percent year-on-year in July, after growing 1.8 percent a month earlier. The annual growth was expected to ease to 1.7 percent.
Sequentially, the consumer price index increased 0.5 percent during the month, following the previous month's 0.1 percent gain. The forecast was for a weaker rise of 0.3 percent, data showed.
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German Retail Sales falls unexpectedly
Retail sales in Germany fell unexpectedly last month, official data showed on Thursday.
In a report, Destatis said that German Retail Sales fell to a seasonally adjusted -1.5%, from 0.7% in the preceding month whose figure was revised down from 0.8%.
Analysts had expected German Retail Sales to rise 0.4% last month.
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French Household consumption expenditure on goods - June 2013
In June, households expenditure on goods decreased by 0.8% in volume*, after a 0.7% increase in May. Over the second quarter, they increased by 0.3% (after –0.2% in Q1 2013). The decline in June was mainly attributable to a decrease in the consumption of energy products. Over the quarter, the growth in expenditure on durable goods and energy products offset the decline in consumption of food products.
Engineered goods : increasing
Durables: slightly decreasing
After an increase in May (+0.8%), households expenditure on durable goods decreased in June (–0.3%). They rose over the second quarter (+1.8%, after –3.2% in Q1). Expenditure on cars were almost stable in June (–0.1%, after +0.9% in May), increasing over the quarter (+2.2% after –5.5% in Q1). Purchases in household durables declined in June as well (–0.3%, after +0.8% in May), but rose over the quarter (+1.7%, after –0.9% in Q1).
Textile-leather: bounce
After a decline in May (–2.8%), households consumption of textile and leather bounced in June (+4.6%). However, it decreased again over the quarter (–2.4%), after a fall in Q1 (–2.2%).
Other engineered goods: decreasing
Consumption expenditure on other engineered goods slightly declined in June (–0.3%, after +0.7% in May), particularly on hardware. They picked up over the second quarter (+0.7%), after a near-stability over the first quarter (–0.1%).
[* Volumes are chained and all figures are trading days and seasonally adjusted.]
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Italy Unemployment Rate Remains Near Record High in June
Italy’s unemployment rate stayed near a record high in June as companies remain reluctant to hire amid the country’s recession.
Joblessness (ITMUURS) dropped to 12.1 percent from 12.2 percent in May, which was the highest since the data series began in the first quarter of 1977, the Rome-based national statistics office Istat said in a preliminary report today. The June rate was lower than the 12.3 percent median of nine estimates in a Bloomberg News survey. Unemployment remained above 10 percent for a 17th month.
Last month, Prime Minister Enrico Letta’s Cabinet approved tax breaks for companies that offer permanent job contracts to young workers or convert temporary contracts into open-ended ones. Letta has said the government plans to pass a second package of measures for youth employment later this year.
The unemployment rate for people between the age of 15 and 24 rose to 39.1 percent in June, Istat said today.
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Euro zone unemployment falls for first time in two years
The number of people unemployed in the euro zone fell for the first time in more than two years in June, the latest sign that the bloc's economy may be pulling out of recession, while inflation held steady in July, fuelled by spending on food.
Compared with May, 24,000 fewer Europeans in the single currency area were jobless in June, the EU's statistics agency Eurostat said on Wednesday, the first decrease since April 2011.
While too small a number to make an impact on the overall level of euro zone unemployment, which was stable at a record 12.1 percent for the fourth consecutive month, the data reverses the seemingly inexorable rise in joblessness numbers.
Alarming fiscal deficits, budget cuts, falling business confidence and the threat of a euro zone break-up drove the bloc into recession in 2011 and predictions of a rebound have so far proved illusory.
But the European Central Bank's pledge to stand behind the euro zone, a recovering U.S. economy and a lessening of harsh austerity policies have helped economic morale improve, taking it to its highest level in 15 months in July.
Low inflation has also helped households struggling with the impact of the 3-1/2-year euro zone debt crisis. Annual inflation was stable at 1.6 percent in July, according to Eurostat's first estimate for the month, the same level as June.
Spending on food, alcohol and tobacco during Europe's summer heat wave in July were the main factor behind the rise in prices, Eurostat said.
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Greek bailout has 11 billion euro funding gap
Greece's second bailout is slated to have a funding shortfall of roughly €11 billion over the next two years, according to the latest report from the International Monetary Fund.
The IMF projects there will be a €4.4 billion shortfall in 2014, rising to €6.5 billion in 2015.
While a funding gap was expected, this is the first time the IMF has clearly laid out what that gap will look like over the next few years.
"Every time in Greece, there's always some sort of financing gap. But then there's always a last-minute fudged agreement," said Stephen Pope, managing partner at the research consultancy, Spotlight Ideas.
There were concerns in June that a potential financing gap would keep Greece from receiving its next tranche of bailout money. However, the funding from eurozone partners and the International Monetary Fund went through as planned.
Greece has been struggling to get its recession-hit economy back on track for years and has required two bailout packages. The second international rescue package required that the country cut public-sector jobs and introduce economic reforms in order to continue receiving regular bailout payments.
The IMF's latest review of the situation in Greece also finds that European partners may have to consider granting Greece more "debt relief" than previously expected. That relief could come in the form of debt forgiveness, a cut to interest rates or extending debt maturities, explained an IMF spokesperson.
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German Unemployment Falls For Second Month
The number of unemployed in Germany declined for a second consecutive month in July, reaffirming the robust labor market situation in the country, the latest figures released by the Federal Labor Agency revealed Wednesday.
The number of unemployed fell by 7,000 persons in July from a month earlier to 2.93 million. Economists had forecast no change in the unemployment figure.
In June, the number of unemployed fell by 13,000, revised from a fall of 12,000 reported initially.
The seasonally adjusted unemployment rate remained unchanged at a two-decade low of 6.8 percent in July. This matched economists' forecast. The unadjusted rate rose to 6.8 percent from 6.6 percent.
In a separate report on Wednesday, the Federal Statistical Office said that Germany's adjusted ILO jobless rate remained unchanged at 5.4 percent in June.
According to the statistical office's labor force survey, the number of unemployed was 2.32 million in June, which represented an increase of 98,000 from June 2012. Compared with May, the number of unemployed rose by 69,000.
The statistical agency also reported today that German retail sales surprised on the downside in June, falling a seasonally and calendar adjusted 1.5 percent month-on-month in real terms. However, sales are expected to improve with the onset of summer.
Meanwhile, German consumer confidence is tipped to reach its highest level in almost six years heading into August, a survey by market research group GfK showed Tuesday. Robust labor market situation, rising income expectations and strong willingness to purchase were the major drivers of German optimism.
Further, confidence among German businesses rose for a third straight month in July, the Ifo Institute said in a survey published last week.
The economy expanded 0.1 percent in the first quarter recovering from a contraction in the final quarter of 2012. However, the Bundesbank said in a report earlier this month that it sees stronger signs of a slowdown in growth in the third quarter after a solid expansion in the second quarter.
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ECB’s Draghi can’t afford to sound all-clear yet
Pundits are falling over themselves to celebrate fragile signs of economic recovery in the euro zone, but European Central Bank President Mario Draghi isn’t likely to sound the all-clear signal when policy makers meet on Thursday.
In part, that’s because banks still aren’t lending. And with credit contracting and money-market rates still elevated, it isn’t clear how the economy can mount a sustained recovery.
“Firmer [purchasing-managers’ index] data may have corroborated the [ECB’s] forecast of recovery, but money-market rates are back at levels which led to an extensive discussion of rate cuts last month,” said Richard Barwell, senior European economist at Royal Bank of Scotland in London.
That said, the desire “to preserve precious monetary ammunition could prove critical in convincing the [governing council] to keep rates on hold,” he said.
The ECB will announce the governing council’s policy decision at 1:45 p.m. Frankfurt time, or 7:45 a.m. Eastern on Thursday. Draghi’s monthly news conference is set to begin at 8:30 a.m. Eastern.
Draghi will be under pressure to provide further clues to the ECB’s likely policy measures nearly a month after he surprised investors by making clear ECB monetary policy would remain loose for an “extended period,” seemingly jettisoning the central bank’s previous refusal to “pre-commit” on future rate moves.
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EUR/USD edges lower after Fed, focus turns to ECB
The euro edged lower against the U.S. dollar on Thursday, after the Federal Reserve gave no indications on whether it will soon begin to taper its stimulus program, while markets eyed the European Central Bank's policy statement later in the day.
EUR/USD hit 1.3266 during late Asian trade, the session low; the pair subsequently consolidated at 1.3273, shedding 0.22%.
The pair was likely to find support at 1.3166, the low of July 25 and resistance at 1.3416, the high of June 19 and a four-month high.
At the end of its two-day policy meeting on Wednesday, the Fed said it would keep buying USD85 billion a month in mortgage and Treasury securities and added that the pace of economic growth is "modest".
However, speculation that the central bank could begin to scale back its stimulus program as soon as September persisted in light of recent U.S. economic reports. Investors were also eyeing the release of U.S. employment data on Friday.
Meanwhile, sentiment on the euro remained fragile ahead of the ECB's upcoming policy statement, as well as ECB President Mario Draghi's traditional press conference.
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Draghi Seen Pausing in Signal of Nascent Euro-Area Recovery
For investors waiting for Europe’s long-delayed recovery to appear, no news from Mario Draghi today may be a good sign.
As evidence mounts that the euro region’s economy is pulling out of its longest-ever recession, economists from HSBC Holdings Plc to Standard Chartered Plc say the European Central Bank president may feel confident enough to refrain from any new policy tools or elaborate on last month’s unprecedented pledge to keep interest rates low for an extended period.
“People are a bit more optimistic about the second half,” said Janet Henry, chief European economist at HSBC in London. The ECB is “keeping the door open to doing more, if and when required, but at the moment the baseline scenario is intact that we do get some kind of recovery later in the year.”
The task for Draghi will be to foster growth while assuring financial markets that the ECB won’t tighten monetary policy too soon, as it did in 2011. While euro-area manufacturing grew at a faster pace than estimated in July for the first expansion in two years, and business confidence improved for a third month, lending to companies and households across the 17-member bloc fell the most on record in June.
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