Eur/usd - page 159
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German yields dip back below 1 pct before German sentiment survey
German 10-year yields fell back below 1 percent on Tuesday ahead of a German survey expected to show investor confidence in the region's biggest economist remained downbeat, underlining the impact of ECB's ultra-easy policy stance.
Adding pressure on the European Central Bank, the OECD on Monday revised its global growth forecasts for major developed economies downward and urged more aggressive ECB stimulus to ward off deflation in the currency bloc.
Price moves were, however, expected to be modest on investor caution before the U.S. Federal Reserve's policy decision on Wednesday and Scotland's independence referendum on Thursday, which may have ripple effects on similar separatists movements elsewhere in Europe, particularly Spain.
Against that backdrop, the market impact of the German ZEW indicator due at 0900 GMT was likely to be fleeting.
"The ZEW has been quite a disappointment in the past releases. The consensus is seeing a further downgrading of the current conditions and expectations component," said Christian Lenk, a strategist at DZ Bank.
"It's a sentiment indicator by financial analysts so it's usually quite fickle. I doubt that it will have a major market impact as there are other major events looming in the near-term."
German 10-year yields, the benchmark for euro zone borrowing costs, were 2.4 basis points down at 0.996 percent. They had risen back above 1 percent over the past week as speculation that the Fed could raise interest rates sooner and faster than previously expected rattled financial markets across the globe.
Yields on other top-rated euro zone bonds were 2-3 bps lower in modest volumes as investors kept a wary eye on the start of the Fed's Open Market Committee policy meeting later on Tuesday.
Investors will be scanning the outcome on Wednesday for clues on the timing of the first U.S. rate hike in more than eight years. They have said they do not expect to raise rates until 2015, but recently strong U.S. economic data has led Fed officials to acknowledge they may need to act sooner than they thought just a few months ago.
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German Investor Confidence Falls to Weakest Since 2012
German investor confidence dropped to the weakest in 21 months amid increasing political tension in Europe, even as the European Central Bank steps up its stimulus.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 6.9 in September from 8.6 in August. That’s lowest level since December 2012. The gauge has decreased every month since December when it reached a seven-year high. Economists forecast a drop to 5, according to the median of 33 estimates in a Bloomberg News survey.
The German economy, Europe’s largest, contracted in the three months through June and Bundesbank president Jens Weidmann said an expansion in the second half of the year may be weaker than previously predicted. The ECB cut interest rates to record lows this month and announced an asset-purchase program after euro-area economic growth stalled and inflation slowed to the weakest pace since 2009.
“The downward trend of the ZEW indicator of economic sentiment for Germany has slowed significantly,” said ZEW President Clemens Fuest. “However, the economic climate is still characterized by great uncertainty. The risk of a sanction spiral with Russia continues to exist and economic activity in the eurozone remains disappointing.”
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The dollar has traded today unchanged or higher compared to its G10 counterparts.
Rose against the SEK, NZD, AUD, GBP and NOK, in that order, whereas it remained unchanged against the USD, JPY, EUR and CAD.
USD sold off across the board on Chinese stimulus, lower Fed expectations
Reports about a program by the Chinese authorities to stimulate the economy by 500 billion yuan is encouraging markets and triggering a US dollar sell off. Update: a report from Fed watcher Jon Hilsenrath at the WSJ also weighs on the dollar. Hilsenrath says what we are also saying in our preview: the critical word “considerable” regarding the time before a rate hike comes to the US is likely to stay with us also tomorrow.
It isn’t only the Aussie, but a much wider movement. Quite a squeeze ahead of the Fed.
China boosts liquidity to the 5 largest banks, seemingly in response to lots of weak economic data coming out from the economic giant. So far, the authorities seemed to let the economy cool down, perhaps as part of battling corruption and also as part of the much needed re-balancing of the economy.
Here’s what’s going on in the markets. Note that each currency has its own story, and today these stories are also supportive of each currency against the greenback.
Regarding the US dollar, the next big event is the Fed meeting tomorrow, and it doesn’t look too good for the greenback
source
Let's see what yellen has to say tomorrow.
Spanish trade balance -1.82B vs. -2.10B forecast
Spain’s trade balance fell less-than-expected last month, industry data showed on Wednesday.
In a report, Instituto Nacional de Estadistica said that Spanish trade balance fell to -1.82B, from -1.47B in the preceding month.
Analysts had expected Spanish trade balance to fall to -2.10B last month.
Yesterday the EURUSD tested the 1.2988 key level and bounced off it but closed above the 10 day moving average. The pair looks like is developing a bearish flag pattern but without any confirmation yet.
Euro zone August final CPI revised up to 0.4% from 0.3% estimate
Consumer price inflation in the euro zone was revised up unexpectedly in August, bouncing off the lowest level since October 2009, official data showed on Wednesday.
In a report, Eurostat said consumer price inflation rose by a seasonally adjusted 0.4% last month, up from a preliminary estimate of 0.3%. Euro zone inflation rose by 0.4% in July.
The rate remains firmly below the European Central Bank's target of near but just below 2%.
Month-over-month, consumer prices inched up 0.1% last month, in line with forecasts and following a 0.7% decline in July.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose by a seasonally adjusted 0.9% in August, meeting forecasts and unchanged from an initial estimate.
EUR/USD was trading at 1.2961 from around 1.2959 ahead of the release of the data, while EUR/GBP was at 0.7953 from 0.7954 earlier.
Meanwhile, European stock markets remained higher. The DJ Euro Stoxx 50 inched up 0.55%, France’s CAC 40 rose 0.65%, Germany's DAX advanced 0.55%, while London’s FTSE 100 tacked on 0.25%.
The USD has been trading mixed.
Higher against CHF and SEK and lower against GBP and CAD and unchanged versus the JPY, NZD, EUR, AUD and NOK.
The GBP depreciated even after the minutes of the last policy meeting of the Bank of England have revealed that the same two members voted for a 25 basis points interest rate, despite the referendum in Scotland.
The CAD has soared after the Governor of the Bank of Canada, have said, he was cautiously optimistic about the future of exports to economic recovery. Stated that the Central Bank does not attempt to manipulate the value of the Canadian currency.
Yellen's speech now makes the market fall