Eur/usd - page 78
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German IFO Business Climate falls to 110.7
The German IFO Business Climate fell a bit more than expected to 110.7 points. It was expected to slide from 111.3 to 110.9 points in March. The Current Assessment component carried expectations of ticking higher from 114.4 to 114.6 points and it actually surprised to the upside with 115.2 points.. The “Expectations” component was also predicted to slide from 108.3 to 107.6 points and it slid all the way down to 106.4 points.
EUR-USD was trading at at around 1.3840 towards the release, remaining on higher ground it recovered to. EUR/USD took a small dip in the immediate aftermath of the publication.
The low was 1.3814 but the pair immediately rebounded back to above 1.3830. The shortfall was not that big.
IFO is considered Germany’s No. 1 Think Tank. However, the ZEW institution already published its figures for March and they disappointed with a drop. The publication hit the euro at the time.
In general, EUR/USD is on a recovery path from the blow it got from Janet Yellen. If the pair continues rising towards 1.40, we could hear sounds of disapproval from the ECB.
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ECB’s Makuch says there are higher deflation risks in Europe
ECB’s Makuch says there are higher deflation risks in Europe and a number of ECB members are ready to take decisive steps
That’s popped the euros bubble.
EUR/USD falls to the sword of another jawboning ECB member. Hit a low of 1.3785 from 1.3817
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EUR/USD creates double bottom as Draghi talks negative
ECB president Mario Draghi completes a series of blows to the euro by his central bank’s members which are all slightly more dovish than usual.
By saying that short term real rates can go negative, he sends EUR/USD down to 1.3750 – the same level it reached in the aftermath of the hawkish Fed decision.
Update: EUR/USD recovers after the initial blow and even climbs to 1.38. The pair is certainly exciting.
Here is a key part from his speech:
Draghi also says that the euro-zone avoided the worst form of deleveraging. The president of the European Central Bank also repeats the stance of the readiness to take additional measures.read more
German Consumer Sentiment To Stay At 7-Year High
German consumer confidence is expected to remain stable at a 7-year high in April, but the developments in Crimea could weigh on the consumer mood in coming weeks, results of a closely watched survey from the market research group GfK revealed Wednesday.
The forward-looking consumer confidence index held steady at 8.5, in line with forecast. The score matched March's reading, which was the highest since January 2007.
The survey, based on 2,000 consumers, was conducted ahead of the escalation of the crisis involving a referendum and Russia's subsequent annexation of Ukraine's autonomous region of Crimea.
If the Crimean crisis were to spread to other parts of Ukraine, a negative effect on the German consumer mood would be very likely, GfK observed. "It cannot be ruled out that this event will unsettle consumers in the coming weeks," the firm said.
The Ifo business confidence survey yesterday showed that firms were worried about the impact of the European Union's economic sanctions against Russia in the wake of the Crimean crisis. The sentiment index fell to 110.7 in March from 111.3 in February.
The economic expectations of consumers in March was back on the road toward recovery. The indicator gained 1.3 points to 33.2 points, the GfK said.
According to GfK, favorable global growth outlook with improved export prospects as well as low interest rates will stimulate the propensity to invest.
Meanwhile, income expectations dropped three points to 45.6 points in March. Nonetheless, expectations remain at a very high level as the stable labor market is nourishing hopes of more increase in collective income.
Following a small decline in the previous month, the third component of consumer confidence, the willingness to buy, registered a clear gain of 6.6 points to hit 55.5 points in March. The indicator suggests that the upward trend that first started in early 2013 has been sustained.
The stable labor market, good income development and a moderate rate of inflation continue to support the willingness to buy.
The GfK reiterated that private consumption will once again be a reliable pillar of the economy this year.
The European Commission has raised its economic growth forecast for Germany this year to 1.8 percent from 1.7 percent and the projection for 2015 was lifted to 2 percent from 1.9 percent.
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Eurozone Leading Index Rises Marginally In February
The euro area leading index rose only marginally in February indicating that the rebound effects from the recession is fading and the pace of growth may not accelerate further, the Conference Board said Wednesday.
The leading economic index that signals turning points in the business cycle, gained 0.1 percent from January, when it rose 1.4 percent.
The small gain in the leading index in February, together with the slowdown in its six-month growth rate, points at the stabilization in economic conditions, said Bert Colijn, senior economist at the Conference Board.
Although the labor market has started providing some momentum, with both income and employment picking up in the fourth quarter, declines in inflation and manufacturing surveys could keep the euro area economy from lifting off, Colijn added.
The coincident economic index, which measures current economic activity, dropped 0.1 percent in February, in contrast to a 0.2 percent rise seen in January.
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Euro remains weaker against dollar
The euro remained weaker against the dollar on Thursday after European Central Bank officials indicated in the week that they are considering fresh policy options to stave off the risk of deflation in the region.
EUR/USD slipped 0.10% to 1.3772, not far from the lows of 1.3748 struck on Tuesday.
The pair was likely to find support at 1.3748 and resistance at 1.3800.
The euro weakened after ECB governing council member and Bundesbank head Jens Weidmann said Tuesday that a negative deposit rate could be an appropriate way to address the impact of strong gains in the euro.
He also said it was not out of the question for the ECB to buy loans or other assets from banks to fight deflation, indicating a softening of the Bundesbank’s stance on quantitative easing.
The same day ECB President Mario Draghi that the central bank stood ready to act if inflation slipped lower than the ECB expected.
Investors were looking ahead to next week’s euro zone inflation report, scheduled for release on Monday, ahead of the bank’s upcoming policy meeting later in the week.
EUR/JPY touched two-week lows of 140.28 on Thursday and was last trading at 140.69, unchanged for the day.
Elsewhere, the dollar edged higher against the yen, with USD/JPY rising 0.11% to 102.16.
The dollar remained supported after upbeat U.S. durable goods orders figures on Wednesday indicated that economy is gaining momentum in the wake of a weather induced slowdown.
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Euro zone private sector loans contract further in Feb -ECB
Lending to households and firms in the euro zone shrank further in February and money supply growth remained subdued, adding to the European Central Bank's list of concerns ahead of its policy meeting next week.
The ECB has cut interest rates close to zero, pumped extra liquidity into the banking system and announced a fresh government bond purchase programme, but the measures have so far not managed to unclog lending to the real economy.
Euro zone inflation is also running far below the ECB's target of just under 2 percent, hitting 0.7 percent in February.
Loans to the private sector fell by 2.2 percent in February from the same month a year earlier, ECB data released on Thursday showed. That compared to a contraction of 2.3 percent in January.
Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 1.3 percent, picking up slightly from 1.2 percent in January.
The ECB holds its next policy meeting on April 3.
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Italy Business Confidence Highest Since Mid-2011
Italy's business confidence rose for a second straight month in March to its highest level in nearly three years, figures from the statistical office ISTAT showed Thursday.
The manufacturing confidence index rose to 99.2 from 99.1 in February. However, economists had expected a higher score of 99.6.
The latest reading is the highest since June 2011, when the print was 100.9.
Manufacturers' assessment on order books and inventories improved, while their production expectations remained stable.
Meanwhile, the sentiment index for the construction sector eased to 75.8 from 76.9. It is the lowest reading since June last year, when the score was 71.7.
The market services confidence index climbed to 92.4 from 90.3 as sentiment in the tourism and business services sectors improved.
Confidence in the retail trade industry eased, with the indicator falling to 94.6 from 96.3.
The composite business confidence index rose to 89.5 from 88.2 in the previous month. It is the highest level since August 2011.
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Eurozone M3 Growth Improves; Lending Falls Again
Eurozone money supply growth improved in February as expected by economists, while downward trend in lending to the private sector continued, official data showed Thursday.
The annual growth rate of the broad monetary aggregate M3 rose 1.3 percent year-on-year in February, faster than the 1.2 percent rise seen in January, the European Central Bank said. The rate came in line with economists' expectations.
Data showed that credit extended to the private sector fell 2.3 percent from last year. Among the components of credit to the private sector, loans decreased 2.2 percent compared with a 2.3 percent drop in the previous month.
Loans to households slipped 0.1 percent in February, while lending for house purchases climbed 0.6 percent.
With modest Eurozone recovery hopefully firming as 2014 progresses and with business confidence improving overall, it is probable that demand for credit from companies will gradually pick up over the coming months, said IHS Global Insight's Chief European Economist, Howard Archer.
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