Eur/usd - page 18
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Euro-zone exports rise 3%; imports up 2.5%
Exports from and imports to the euro zone picked up in June, a reflection of the currency area's emergence from its long contraction and a tentative pickup in consumer demand.
The European Union's statistics agency Friday said that without a seasonal adjustment, the euro zone had a surplus in its goods trade of 17.3 billion ($22.9 billion), up from EUR12.8 billion in June 2012.
On a seasonally adjusted basis, exports in June rose 3.0% from May, while imports were up by 2.5%, the strongest rise since January.
The widening in the currency area's trade balance indicates that exports were one factor driving the economy's return to growth in the second quarter. Figures released Wednesday showed the combined gross domestic product of the euro zone's 17 members rose 0.3% in the three months to June, having fallen in each of the six previous quarters.
If sustained, the rise in the euro zone's imports would be a positive development for the currency area's trade partners. Weak demand in the world's second largest economic area has been a drag on growth in other parts of the world, particularly neighboring countries that are heavily dependent on the currency area as an export market.
However, any pickup in consumer demand is likely to be weak and patchy. The long contraction has left a legacy of record-high unemployment, while many consumers are burdened by high levels of debt, and wage growth has been weak.
Eurostat Friday also said consumer prices rose 1.6% in the 12 months to the end of July, confirming its initial estimate. Prices fell 0.5% between June and July.
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EUR/USD falls as mixed U.S. data still points to economic growth
The euro traded lower against the dollar on Friday even after U.S. housing data and consumer sentiment data missed many expectations, as investors traded on sentiments the U.S. economy is still improving and the Federal Reserve remains on track to dismantling stimulus programs in the near future.
In U.S. trading on Friday, EUR/USD was down 0.18% at 1.3321, up from a session low of 1.3318 and off from a high of 1.3380.
The pair was likely to find support at 1.3205, Thursday's low, and resistance at 1.3399, the high from Aug. 8.
The Commerce Department reported earlier that U.S. building permits rose 2.7% to 943,000 units in July, disappointing expectations for an increase of 2.9% to 945,000 units although June's figure was revised up to 918,000 units from 911,000.
The government added that housing starts rose 5.9% to 896,000 units in July, missing expectations for a 8.3% increase to 900,000 units. Still, June's figure was revised up to 846,000 units from 836,000.
Elsewhere, the Thomson Reuters/University of Michigan's preliminary consumer sentiment index fell to 80.0 in August from 85.1 in July. Analysts were expecting the index to rise to 85.5 this month.
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Merkel sees no new debt haircut for Greece – oh well
German chancellor Angela Merkel doesn’t see a fresh debt haircut for Greece. This is different than an assessment from the German Bundesbank and stands in contrast to the funding gap that the IMF sees.
It’s important to remember that there are elections in Germany on September 22nd. Also her finance minister made similar comments recently.
The incumbent chancellor said Germany will reassess the situation in early 2014 in an interview with FAZ. This is the time that the Bundesbank sees a third bailout for Greece.
Merkel would like the crisis in Greece to remain away from the election campaign. The bailouts are not popular in Germany.
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Europe Week Ahead: EZ-, German-, French PMI Indices
Flash PMI indices for the manufacturing and services sectors in France, Germany and the Eurozone will be the main focus of attention next week. We expect further relatively strong rises in business confidence across the board as suggested by the broad-based improvement in the forward-looking components of the indices. In particular, we expect the Eurozone manufacturing PMI to increase from 50.3 to 50.8, which would be its second consecutive month above the 50-threshold, thereby suggesting mild expansion of activity throughout Q3. Both the new export orders and the new orders’ components edged up above the 50-threshold in July and to their highest level since May 2011. Higher domestic and foreign demand should lead to further rises in activity. With global growth prospects picking up and Eurozone peripheral countries gaining in competiveness, we believe business confidence will likely continue to improve going forward. In the services sector, rising consumer confidence and lower drag from austerity should underpin activity and lead to an increase in the Eurozone services PMI to 50.3, into expansion territory for the first time since January 2012. The Eurozone composite PMI is expected to increase from 50.5 to 51.0, thereby suggesting stronger expansion into Q3
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EUR/USD Forecast August 19-23
EUR/USD managed to recover from a dip lower and remain on high ground. What is the next move for the pair? Flash manufacturing and services PMIs, and German Producer price index are the main events on our calendar. Here are the market movers for the coming week and an updated technical analysis for EUR/USD.
Gross domestic product of the Euro area increased for the first time since the third quarter of 2011, rising 0.3% in the second quarter. The positive release indicates the region is out of recession. Germany and France rebounded strongly and a substantial improvement was shown in Italy and Spain. Germany grew by 0.7% following a small rise of 0.1% in the first quarter and France exited its recession and with a bang, jumping 0.5% in the second quarter. Further good news came from German ZEW Economic Sentiment rising to 42 points from 36.3 in June. These encouraging figures clearly show recession is over however the Euro-zone is not out of the woods yet. In the US, key employment and inflation figures were good and supported tapering in September, but this wasn’t enough for the greenback.
*All times are GMT
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Germany election: Merkel warns against over-confidence
Germany’s Social Democrats have been marking their 150th anniversary with a rally in Berlin, ahead of next month’s elections.
The SPD and the Greens – who have ruled out a coalition with the Left Party – trail Angela Merkel’s centre-right coalition by around eight points in the polls.
“I want to become chancellor of the Federal Republic of Germany because the political standstill of this government weakens Germany,” Peer Steinbrück, SPD candidate, told the crowd.
“There is not enough investment in the future and this country is only being administered and not politically shaped.”
Chancellor Merkel, fighting for a third term in office, is warning her supporters against complacency. She said that voters must recognise the country’s achievements.
“Ten years ago Germany was the sick man, too, the sick man of Europe. Then we changed and, due to these changes, we are today the anchor of stability and the motor of growth in Europe. We want to stay in that position,” Merkel told a rally.
Merkel is worried that the SPD and the Greens might break their vow and form a coalition with the ostracised Left Party, which is popular in the east and on eight percent in voter surveys.
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Germany to return to normal growth rates in second half: Bundesbank
The German economy should stabilize in the second half of 2013 after posting its strongest growth in over a year in the second quarter, the Bundesbank said on Monday.
Growth in Germany and the rest of the euro zone will benefit from the European Central Bank's record-low interest rates, which it has vowed to keep low for an extended period, the Bundesbank said, but added that this was not an unconditional commitment.
Stronger-than-expected growth rates in the euro zone's largest economies, Germany and France, helped pull the currency union out of recession in the second quarter, mainly driven by demand at home.
"In the second half of 2013, economic growth in Germany is likely to return to normal and steady rates," Bundesbank said in its monthly report.
Germany's traditionally export-driven economy is relying on domestic demand to prop up growth as foreign trade looks likely to act as a drag this year, given that much of the euro zone, to which it sends 40 percent of its exports, is still struggling.
The Bundesbank noted that domestic investment was unlikely to pick up discernibly without a long-term improvement in growth prospects for Germany's neighbors and the implementation of measures to solve the debt crisis to dispel uncertainty.
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Spain's Bad Loan Ratio At Record High
Spanish banks' bad loan ratio hit a fresh record in June, data from the Bank of Spain showed Monday.
Bad loans as a percentage of total credit increased to 11.6 percent in June, from 11.2 percent in May. Doubtful debt increased to EUR 176.42 billion from EUR 170.2 billion in May.
Total loans came in at EUR 1,519.1 billion compared to EUR 1,518.98 billion in the previous month.
The bad loan ratio dropped at the end of 2012 after lenders transferred troubled assets to bad bank. But the continuous increase in bad loans this year is weighing on the earnings of lenders.
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German Producer Price Inflation falls unexpectedly
Germany’s producer price index fell unexpectedly last month, official data showed on Thursday.
In a report, Destatis said that German Producer Price Inflation fell to a seasonally adjusted annual rate of -0.1%, from 0.0% in the preceding month.
Analysts had expected German Producer Price Inflation to rise 0.2% last month.
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Eurozone Construction Output Rises For Third Month
Eurozone's construction sector output increased for a third consecutive month in June, the latest data from Eurostat revealed Tuesday.
Production rose 0.7 percent month-on-month in June following a 0.5 percent increase in May and a 1.3 percent growth in April.
Building construction grew 0.3 percent month-on-month in June. Civil engineering rose 1.3 percent over the same period.
Compared with June 2012, construction production decreased 3 percent following a 3.8 percent decline in May. This was the fourth consecutive fall in output on an year-on-year basis.
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