Europe's
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 ...
The recent outperformance of the US economy has the dollar appreciating against most currencies over the past week. Some of the current price levels have a percentage of the market beginning to price in expectations of a "secular USD bull market." Are they getting ahead of themselves? The dollars job has been made simpler by the various central banks easing up on their monetary policy rules - just look at the RBA. Governor Stevens recent move has currently put the AUD into a structural decline. Even with Abenomics architecturally underway, it's the stronger US data story that would suggest that Yen is about to undertake a substantial further depreciation ahead. In the single currency's case, underperforming Euro-data is not helping the EUR's cause.
It's not too much of a surprise to see ...
EURO Tripped Up By A Slammed Aussie
The increase in the volume of commentary from Germany as to how uncomfortable they are becoming to ECB's monetary policy stance is certainly more noticeable - Germany is clearly against further ECB stimulus. Chancellor Merkel and some of her policy makers are feeling uneasy about the high level of liquidity, the 'long' period of low interest rates and what impact this is having on the various asset classes.
However, the difference this time is that the ECB policy makers are willing to go it alone - willing to take action without German political support. The ECB is looking to provide further added stimulus that is supported by the zone's majority but being resisted politically by Germany. A direct German/ECB spat is not what the single currency needs ...
EURO's Survival - A Tale Of Two Ideas
Now what? The FX market has got what it been coveting for many months, albeit a few weeks earlier than originally planned - USD/Yen trading north of the psychological 100 print. The pair, currently meandering through 'no-mans territory' is more influenced by the markets perception of the Fed's attitude towards QE and a potential exit strategy rather than Abenomics reasoning. Is the market to grind out further dollar supporting gains or are investors to reload on pullbacks and keep the faith in the BoJ?
At the G7 'boys' club this past weekend, Japan continues to get the green light and thumbs-up from fellow members for the Yen's depreciation. Japan's Finance Minister Aso said there had been “no criticism of Japan's policy from the G7,” while the Bank ...
Fundamental Analysis
EUR
"German industry has entered the current quarter with a lot of momentum."
- Heinrich Bayer, an economist at Deutsche Postbank AG
Output at German manufacturers improved unexpectedly in March, reviving hopes about the strength of Europe's biggest economy. Production increased 1.2% from February, when it gained 0.6%, the Economy Ministry said Wednesday.
Read more: FULL REPORT - Fundamental Analysis
Technical Analysis
EUR/USD
"The concerns recently from the policy makers in the euro zone have been that the core has been slowing."
- Royal Bank of Scotland (based on Reuters)
EUR/USD is pressed in a channel for more than a month, as the pair is traded between the 100-day at 1.3151 and the 55-day SMA at 1.3007. As the pair is traded flat so long, the both Bollinger ...
The Australian and New Zealand currencies bounced on Thursday after both countries posted stellar jobs data, while the euro held near a one-week high against the dollar after upbeat German factory activity continued to bolster sentiment.
Investors drove the Aussie up 0.6 percent to $1.0232 after data showed jobs surged by 50,100 jobs in April, well above a median estimate of 12,000 in a Reuters poll.
The move helped the Australian dollar recover from a two-month low of $1.0155 struck on Tuesday, after the central bank cut interest rates to a record low.
The Kiwi also rose over half a U.S. cent to $0.8451, jumping as high as $0.8470, after data showed unemployment falling to a three-year low in the March quarter and a hefty increase in full-time jobs.
That helped it pulled away from a ...
The euro advanced against the dollar for a second straight session on Wednesday as an unexpected rise in German industrial output pared back prospects of a near-term interest rate cut in the euro zone.
Wednesday's data followed another upbeat German industrial orders report, helping euro sentiment overall, while falling borrowing costs in peripheral euro zone countries have also bolstered Europe's common currency of late.
Further easing from the European Central Bank was still a possibility, however, particularly in the wake of ECB President Mario Draghi's statements on Monday about how a rate cut was still an option if economic data weakens significantly.
But for now, BNP Paribas currency strategist Vassili Serebriakov said investors are focused on financial markets, with euro zone ...
German industrial output unexpectedly jumped in March, fanning hopes that Europe's top economy is gaining traction after a disappointing end to 2012, despite concerns about other parts of the euro zone.
Output jumped by 1.2 percent on the month in March - beating even the highest forecast of 0.8 percent in a Reuters poll -after an upwardly revised 0.6 percent increase in February as factories churned out more goods and energy production rose.
On Tuesday, figures showed industry orders rose again in March, suggesting Germany's manufacturing sector, which makes up around one fifth of the economy, is bouncing back.
"It looks as if the outlook for German industry is clearing slowly but surely," ING senior economist Carsten Brzeski said.
"There's a lot of contradictory signs... but ...
The euro rose against the dollar on Wednesday after an unexpected rise in German industrial output was seen making a near-term euro zone interest rate cut less likely.
However, analysts were wary about how much the euro could rise given that other recent data from Europe's largest economy has been much gloomier.
The euro rose 0.5 percent to a session high of $1.3148 after industrial output rose 1.2 percent during March, against forecasts for a 0.1 percent fall. It followed surprisingly strong industrial orders on Tuesday.
"Positive German industrial production data clearly questions whether there is space for another euro zone rate cut right now," said Simon Derrick, head of currency strategy at Bank of New York Mellon.
Traders reported stop-loss euro buy orders at $1.3150 which, if ...