Euro hit by Data

The euro slumped beneath the 1.55-region to 1.5463 following a disappointing set of German retail sales data, which unexpectedly declined for the second consecutive month down 1.7% m/m and 1.0% y/y.

The Eurozone unemployment rate in April held steady at 7.1%, while the flash inflation for May crept up to 3.6% from 3.3% a month earlier.

The recent slate of softer German data, including yesterday’s labor report, has pressured the euro lower but does not alter our outlook for the ECB to remain hawkish over the coming months.

As such, we anticipate a renewed strengthening in the single currency over the coming weeks to retest its all-time highs near 1.60.

 

Technorati Tags: Economy, Europe, Euro, fvarga

USD Firms against Majors

The dollar relinquished some of its earlier gains versus the majors, initially strengthening to 1.5463 against the euro before settling back near the 1.5550-region.

The greenback also remains firm versus the yen, maintaining its gains above the 105-level near 3-month highs just beneath 105.80.

The economic data from the US was mixed yesterday, which included PCE, personal consumption, personal income, Chicago PMI and the University of Michigan sentiment survey.

April personal consumption declined to a flat reading versus 0.1% a month earlier, while the personal income report drifted lower to 0.2% from 0.3%.

Inflation, according to the PCE index, held steady with the headline reading at 3.2% y/y and 0.2% m/m.

The core PCE report slipped to 0.1% from 0.2% a month earlier and at 2.1% y/y.

The Chicago PMI report was slightly better than expected in May at 49.1 and improving from 48.3 a month earlier, but continued to remain beneath the key 50-level.

Meanwhile, the final reading for the University of Michigan improved moderately from the initial reading to 59.8, but remains mired near its lowest levels in nearly a decade.

 

Technorati Tags: Economy, USA, USD, fvarga

Some Headlines

£       BoE MPC member Barker said that businesses are more concerned over high energy and supply prices at this time than tighter credit conditions

£       BoE MPC member Blanchflower:  “Our forecast is that inflation will come down in the medium term, but our concern is that we wouldn’t want economic activity to drop dramatically…If there’s a sense we are moving to a recession, we will have to make sure we don’t”

$       US Q1 GDP growth was revised higher to +0.9%QoQ from the initial estimate of +0.6%

$       US core price measure of personal consumption expenditures (PCE) was revised lower to +2.1% in Q1 from the initial estimate of +2.2%

$       US initial jobless claims were higher at 372k in the week ended 24 May versus consensus of 370k and a revised 368k in the week prior (initially 365k); continuing claims jumped 36k to 3.104m in the week ended 17 May, which was the highest since February 2004

€       Eurozone EC economic sentiment was steady at 97.1 in May after 11 consecutive months of decline; industrial sentiment was steady at -2 but consumer confidence dropped to -15 in May from -12 previously

€       German nominal retail sales declined 1.3%MoM in April versus a drop of 2.2%MoM in March

£       UK CBI reported retail sales volume balance rose to -14 in May from -26 in April; annual sales volumes are expected to grow in the month ahead

£       UK GfK consumer confidence fell further-than-expected to -29 in May from -24 in April

 

Technorati Tags: Economy, USA, Europe, fvarga

Euro Zone Annual Inflation Accelerates More Than Expected In May

Euro zone annual inflation accelerated to 3.6% in May, a flash estimate from the Eurostat showed Friday.

Annual inflation increased from 3.3% reported in April. Consumer prices climbed more than 3.5% expected.

Annual inflation continues to stay well above the central bank target, which is to keep the inflation rate “below, but close to, 2% over the medium term”.

The statistical office will publish final inflation data for May on June 16.

Technorati Tags: Inflation, Europe, fvarga

May 29: Before the Bell in USA

Winded from its climb of the past two days, Wall Street is pausing for breath - and assessing mixed results from retailers. Stock futures are pointing sideways.

Upcoming data includes the Commerce Department’s second preliminary estimate of first-quarter gross domestic product and the Labor Department’s release of weekly jobless claims.

On the Fed front, chief Ben Bernanke and Gov. Donald Kohn have separate speaking engagements, and the Kansas City branch is releasing its monthly manufacturing survey.

The dollar has rallied after hawkish comments by two Fed members suggested the central bank might soon stop cutting interest rates, while U.S. Treasuries are mostly lower.

Oil prices are down, with U.S. crude below $130 a barrel, as demand falters in the United States and other countries.

The Wall Street Journal says General Motors is preparing to announce still more restructuring moves that could include the elimination of some slow-selling models.

 

Technorati Tags: Economy, USA, Stock Market, fvarga

Euro Falls On Fisher’s Comments And Increased German Unemployment

The dollar rose to the highest level in more than a week against the euro after Federal Reserve Bank of Dallas President Richard Fisher said the central bank will raise interest rates should consumers expect faster inflation.

The currency also gained for a fourth day against the yen before a U.S. government report today that will probably show the economy grew at a faster pace than initially estimated last quarter.

The dollar also strengthened as oil fell on concern near record-high prices will prompt consumers to cut purchases.

The dollar rose to $1.5547 per euro, the strongest since May 20, before trading at $1.5559 at 6:54am in New York, from $1.5638 yesterday.

It advanced to 105.11 yen, after rising yesterday to 105.31 yen, the highest since May 14. The yen was at 163.57 per euro after touching 164.48 yesterday, the weakest since April 24.

Futures on the Chicago Board of Trade yesterday showed a 33 percent chance the Fed will raise its target rate by a quarter- percentage point to 2.25 percent on Sept. 16, up from 29 percent yesterday.

At time posting (20:15 - GMT+8  ), rates are:

 

EURUSD	1.5555
USDJPY	105.265
GBPUSD	1.9769
USDCAD	0.9858
USDCHF	1.0470
EURCHF	1.6289
EURGBP	0.7869
EURJPY	163.7818
USDTWD	30.45
AUDUSD	0.9588
NZDUSD	0.7819
USDSGD	1.3679
EURTWD	47.3616

 

Technorati Tags: Forex, Rates, Currencies, fvarga

USD Buoyed on Durable Goods Orders

The dollar extended its gains versus the euro and yen on Wednesday, but struggled to carry over that strength against the sterling and Aussie.

US economic data released earlier today propped the greenback up near the 1.56-level against the euro and 105.29 versus the yen.

Durable goods orders for April surprised to the upside, with the headline figure posting a 0.5% decline and beating calls for a drop of 1% versus a 0.3% decline in March.

The excluding transportation orders surged by 2.5% compared with forecasts for a 0.5% decline and up from 0.9% the previous month.

The US economic calendar for today consists of Q1 GDP, core PCE and weekly jobless claims.

The Q1 GDP reading is expected to improve to 0.9% from 0.6%, while the GDP deflator is seen unchanged at 2.6%.

Core PCE prices are also expected to hold steady at 2.2%. Weekly jobless claims are seen creeping back up to 370k from 365k a week earlier.

Minneapolis Fed President Gary Stern offered a downbeat assessment of the economy, saying the current downturn in housing appears more severe than in the early 90’s.

Stern said that US economic growth will likely be modest in the near-term and expects unemployment to rise somewhat.

He said that overall inflation growth is clearly too rapid and attributed the increase to food and energy costs.

Further, Stern tried to dissuade the assertion that energy prices and the dollar were linked.

 

Technorati Tags: Economy, USA, USD, Euro, fvarga

Euro Mixed Against Majors

The European single currency showed mixed performance against its major counterparts during early New York trading on Wednesday.

The euro advanced to an 8-day high of 1.6281 versus the franc and a 5-week high of 164.51 versus the yen.

However, the common currency dropped to as low as 0.7920 against the pound, 1.5541 versus the loonie, 1.6136 against the Aussie and 1.5613 versus the dollar around 8:30 am ET today.

The U.S. Department of Commerce released its report on durable goods orders in the month of April, showing that durable goods orders fell 0.5% in April following a 0.3% drop in March.

As of now, the euro is trading at 1.6266 against the franc, 1.5542 versus the loonie, 0.7926 versus the pound, 1.6322 versus the Aussie, 164.34 versus the yen and 1.5629 against the buck.

 

Technorati Tags: Economy, Euro, USD, fvarga

Dollar Gains as Eurozone Posts Its Worst Current Account Deficit in a Decade

Another topsy turvy night of trade in the currency markets as EURUSD first rose nearly 100 points on the back of elevated inflation numbers only to give back all its gains as the region’s Current Account recorded its largest deficit in a decade.

The euro initially rose to a high of 1.5761 in early Frankfurt trade as German inflation data and Import Price index all printed hotter than expected.

The rally however, quickly turned sour after news of a massive EZ Current Account deficit hit the screen. Current account deficit in the region increased to a whopping -15.3 Billion euros from a 7.5 Billion surplus the month prior.

One of the biggest changes occurred  in the  inflow of goods component which went from a positive 4.5 Billion euros to  negative 3.9 Billion euros.  This is the third month out of the past four that the region has recorded a Current Account deficit rather than a surplus.

The trend clearly shows that the region’s vaunted export engine which has been responsible for a string of current account surpluses for most of this decade, is starting to sputter badly. As EURUSD trades near record highs while global consumer demand cools due to soaring energy prices, EZ exporters will be facing a very challenging climate in months to come.

The euro, which has benefited mightily from the EZ superior balance sheet position vis a vis the US, may now become vulnerable to structural concerns.

While the EZ Current Account deficit is still miniscule relative to US’s near $1 Trillion gap, the negative turn of trend in the EZ may temper speculative appetite for more euro longs at these levels.

While EZ producers have done a Herculean job of maintaining demand for their goods at highly disadvantageous exchange rates, tonight’s news shows that they may reached the limit of their abilities and will likely suffer further decline in their business if the pair remains near record levels.

Attention in North American session will turn to US Durable Goods numbers which are expected to contract sharply form the month prior.

The EURUSD may see a bounce if the data prints worse than expected, but given tonight’s woeful CA numbers the extent of the upside move will likely be limited.

Furthermore, the true mover in the FX market may turn out to be the price of oil. If decline in crude prices accelerates, the greenback is likely to extend its rally, with traders betting on some relief for the beleaguered US consumer.

 

Technorati Tags: Euro, Current Account, Economy, Europe, fvarga

US Dollar Finds Traction

The dollar was inundated with economic releases yesterday; yet the solid wall of bearish market-movers wouldn’t curb a steady dollar rebound.

The return of US volatility from the extended holiday weekend allowed traders to reevaluate last week’s anti-dollar run and put the single currency back on an even keel.

Among the many high-level reports, the top release was the Conference Board’s reading of consumer confidence for May.

Economists had already projected a significant drop from the report after the University of Michigan marked a 26-year low in its own indicator.

However, the sentiment gauge would still surprise with a greater than expected decline to 57.2 - the worst reading since October 1992.

What’s more, Americans were growing more pessimistic on employment and income trends, which in turn depressed their plans to make major purchases.

Realistically, if the world’s largest economy is too avoid an extended period of negative growth, the consumer sector will need to spend.

In other news, the Richmond Fed manufacturing activity index joined the previously released Empire and Philly regional numbers by dropping back into contractionary territory.

In the year through March, the composite inflation indicator slumped 14.4 percent to uphold the trend of consistently declining price from January 2007 and set a new record low.

From the more timely new home sales report however, a major downward revision to March’s figure allowed a 3.3 percent jump in purchases over April.

The components were more encouraging with prices rising 1.5 percent and inventories pulling back - both suggestive of improvement in activity.

Looking ahead to today’s fundamental offerings, the number of indicators drops, but their potency does not.

The durable goods orders gauge for April will measure capital investment while energy prices continually set record highs and consumer spending forecasts hit new lows.

 

Technorati Tags: Economy, USA, fvarga