Euro
This week was relatively quiet in terms of news, though some important macroeconomic reports were released. Meanwhile, the US dollar was rising against other most-traded currencies and the Dollar Index surged to the highest level in almost three years.
As was expected, the dollar managed to rally despite possible obstacles. The major driver of the gains was speculation that the Federal Reserve will end its quantitative easing program. This week’s macroeconomic data was bad for the most part and, truth be told, did not support the outlook for reduced stimulus. Yet this did not prevent talks about QE end to persist.
The euro had its share of problems that pushed it down against the greenback, the major of which were the miserable GDP reports from Germany, France and the whole eurozone. ...
Last week, choppy and volatile market movements was the dominant sentiment, gold markets were rattled under heavy downside pressures over the worsening debt crisis in Europe and fears were heightened by the prevailing jitters over the slowing global recovery.
While Eurozone finance ministers have given the green light to the release of fresh rescue loans to Greece, while Cyprus received its first emergency loan from the European Stability Mechanism (ESM). Yet, ministers made little progress over the establishment of a proposed banking union as the split between euro area states over the legal framework for the single supervisory mechanism
The European continent has completed a hectic week, showing that the economy is still suffering in its recovery journey, where the Gross Domestic ...
U.S. Review
A Mixed Bag for Q2
- Economic data this week was rather mixed, with positive signs out of the consumer, but faltering signs out of the industrial sector and housing in April.
- Retail sales increased 0.1 percent in April; however, the headline number understates the strength in sales. Declining prices at the pump drove nominal retail sales lower. Excluding sales at gasoline stations, retail sales were up 0.7 percent.
- Weak global growth is weighing on the industrial sector. Manufacturing output fell for the second consecutive month in April.
A Mixed Bag for Q2
From the data released this week that covered a range of sectors, we had hoped to gain a clear idea of what lays ahead. However, we are left wondering just how these spring months will shape up.
The consumer is ...
HIGHLIGHTS OF THE WEEK
United States
Eurozone recession drags on for the sixth consecutive quarter as economic output declines 0.2% in 2013Q1. Growth in France and Italy declined by 0.2% and 0.5%, respectively, while the German economy grew ever so slightly, at a 0.1% pace.
First quarter growth accelerated in Japan as the Abenonomics-inspired yen depreciation fueled doubledigit export growth in the first three months of the year.
Fiscal retrenchment in the U.S., along with some transitory factors, has brightened the deficit outlook. Deficit for FY13 was revised down by $203bn, and looks $618bn lighter for the 2014-23 period.
Domestic data releases came in weak for externally-exposed sectors, but remained robust for the more domestically-oriented ones, with calls for exit from QE growing ...
Highlights
FX return analysis
Gold hurtling towards 2013 lows
Fundamental focus: UK and Europe
BOJ to stand pat
Clarity needed from the Fed
FX return analysis
The USD was the star performer last week, gaining against all of its G10 counterparts. The dollar index broke above 84.10 - a key resistance level - to the highest level since mid-2010. Interestingly, the dollar pushed higher even though there were some soft economic data points from the US last week including weaker inflation and initial jobless claims. The key driver of the stronger buck appears to have been some hawkish comments from Fed speakers. San Francisco Fed speaker John Williams and Charles Plosser both said that QE could end by 2014. Although Williams and Plosser are not voting members of the Fed this year, their ...
Throughout the US session today we watch the major pairs narrow trade today as the market is close to close and the week is ending as a result of present technical movements and also the presence of mixed sentiments; fears and hopes, with most of the data this week coming out gloomy or below market forecasts while that today cheerful data was report.
In fact today we saw that the US leading indicators, which is an index designed to forecast economic changes in the upcoming period of time, rose cheerfully in April by 0.6 percent.
While that the University of Michigan Confidence preliminary reading rose cheerfully to 83.7 from 76.4; an indication that confidence regarding personal finances, business conditions and purchasing power gained some strength.
Accordingly the euro is presently ...
US dollar is heading higher today, surging on the latest news from the Federal Reserve. Comments about the Fed’s quantitive easing program — and its potential end this year — are lending strength to the greenback.
The President of the San Francisco Federal Reserve, John Williams, made comments indicating that the current quantitative easing program might end this year. The idea that the efforts to keep the dollar weak might be coming to an end is lending strength to the US dollar.
Greenback is also gaining strength as Forex traders compare the economic situation in the United States with other regions. Even with the somewhat disappointing data from earlier this week, the greenback is still in a relatively strong position — especially when compared to the continued problems in the ...
European stocks closed on positive territories Friday, ending the fourth consecutive weekly gain, taking cue from U.S. data which showed U.S. consumer confidence surged above analysts’ estimates.
In the U.S., the Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 83.7 in May from 76.4 in April, a report today showed. The median forecast had called for a gain to 77.9. The forecasts ranged from 74 to 82.5.
A separate release showed that an index of U.S. leading indicators climbed 0.6 percent in April. That exceeded the 0.2 percent median estimate.
European carmakers, which have rallied 21 percent in the past four weeks, were the best-performing industry group on the Stoxx 600. PSA Peugeot Citroen and Renault SA jumped 10 percent to 7.14 euros and 3.6 ...
Recent rallies in Non-USD currencies resulting from poor US data have not lasted long. And those rallies resulting from strong US figures via the indirect effect of rallying equities (risk-on) have not lasted either. Broadening pro-USD sentiment may stay for longer than we had thought as the US dollar index has exited from another 9-year down cycle.
The greenback has primarily been boosted by traders' realization that the Federal Reserve is the central bank most likely to precede its global peers in reducing its asset purchases program, regardless of whether it ends up not maintaining or increasing the program altogether. What matters in currencies are relative expectations, and at the present juncture, the Fed is the most likely to signal a gradual tapering of asset purchases, than other ...