Further Euro Gains Likely as Central Banks Stay Loose
The euro and other higher-yielding currencies are positioned to continue to gain against the dollar this week, even as flagging U.S. jobs data cast doubt on the global economic recovery.
Investors need somewhere to put the cheap money sloshing around their portfolios, courtesy of the ultraloose policies recommitted to last week by the U.S. Federal Reserve and other central banks.
As long as investors remain assured central bankers will keep the cheap money flowing, money will continue to funnel into risk-positive trades, including high-yielding currencies and stocks, analysts said.
"None of the Group of Three central banks is rushing to withdraw liquidity," Steven Englander, chief U.S. currency strategist at Barclays Capital in New York, said of the U.S., euro-zone and Japanese central banks. "Through the rest of the year, markets are going to take comfort in that," sending risk-positive assets higher.
In a report to finance ministers and central-bank governors from the Group of 20 leading economies, the International Monetary Fund said there are indications the U.S. dollar is being used as a funding currency for "carry trades," a strategy in which investors borrow in currencies that are expected to have low interest rates over the medium term to buy currencies that are expected to have higher interest rates.
"These trades may be contributing to upward pressure on the euro and some emerging economy currencies," the IMF said. "The euro has experienced most appreciation among major advanced economy currencies and remains on the strong side of its equilibrium."
But G-20 officials gave no indication that they would take action that would force investors to rethink their carry trades. Their final statement made no mention of currencies, and discussion on foreign-exchange issues on the sidelines of their meeting in St. Andrews, Scotland, appears to have been limited.
The IMF added to pressure on the Chinese government to allow the yuan to appreciate by describing the currency as "significantly undervalued."
But U.S. Treasury Secretary Timothy Geithner said tensions with China over exchange-rate policy aren't escalating, while Chinese officials repeated their call for a stable U.S. dollar.
Friday in New York, the euro was at $1.4847, down from $1.4877 late Thursday. The dollar was at 89.96 yen, down from 90.77, while the euro was at 133.56 yen from 135.04. The U.K. pound was at $1.6610, up from $1.6587. The dollar was at 1.0173 Swiss francs from 1.0162 francs.
/online.ws
воскресенье, 1 ноября 2009 г.
ECB rates on hold as experts seek signs on bank's loan policy
RANKFURT: Eurozone interest rates are set firmly on hold and any signs of change will probably show up first in the European Central Bank's exceptional loan support measures, analysts say.
"The ECB will leave interest rates on hold at 1.0 percent at its November policy meeting," Capital Economics economist Jennifer McKeown said on Friday. Bank policymakers convene on Thursday.
The rate has been at a record low since May and persistent concern over the strength of an anticipated eurozone economic recovery will keep it there for some time, experts say.
European business and consumer confidence is on the rise, having firmed in October for the seventh consecutive month, but ECB President Jean-Claude Trichet has stressed that a recovery would be “uneven."
The euro's rise in value against the dollar has stirred up a headwind for exports from eurozone countries, while domestic consumption remains fragile amid fears that unemployment could climb higher in 2010.
The US Federal Reserve and the ECB "still harbour doubts about the pace of recovery and expect only lackluster growth in the medium term," Commerzbank economists said in a research note.
But the ECB has also warned banks to brace for the end of “enhanced credit support," which expanded after the US investment bank Lehman Brothers collapsed in September 2008.
ECB governing council member Axel Weber, who is also the German central bank governor, commented last week that dependence on central bank funds was "certainly not a sustainable business model."
"Banks should prepare for the progressive withdrawal of medicine administered by central banks," Weber said.
The main feature of ECB support has been the supply of unlimited amounts of cash at its benchmark rate for periods of up to a year, aimed at keeping credit flowing through eurozone banks to the wider economy.
Reaching a peak in June with one-year loans of 442 billion euros (655 billion dollars) -- the largest volume of funds ever provided in a single step -- the policy has helped bring down interbank lending rates.
But banks have been slow to relay much of the credit to businesses and households, saying that demand has fallen as a result of the global downturn.
In September, eurozone lending to the private sector contracted for the first time on record, though an ECB bank lending survey showed later that banks could begin easing credit standards soon and that demand for home mortgages was firmer.
The economic think tank IFO said Friday that the credit hurdle in Germany, the eurozone's largest economy, was slightly lower in October though large firms found it harder than smaller ones to secure loans.
As a first step in what is called an "exit strategy" for unorthodox measures, the ECB could announce that its next 12-month refinancing operation in December could be the last, and/or that it will begin to charge more than 1.0 percent for central bank funds.
But Weber implied that the policy of granting all requests for funds, also an exceptional measure, would likely be continued even after the length of time they are loaned for was cut back towards the previous maximum of three months.
www.timesofoman.com
RANKFURT: Eurozone interest rates are set firmly on hold and any signs of change will probably show up first in the European Central Bank's exceptional loan support measures, analysts say.
"The ECB will leave interest rates on hold at 1.0 percent at its November policy meeting," Capital Economics economist Jennifer McKeown said on Friday. Bank policymakers convene on Thursday.
The rate has been at a record low since May and persistent concern over the strength of an anticipated eurozone economic recovery will keep it there for some time, experts say.
European business and consumer confidence is on the rise, having firmed in October for the seventh consecutive month, but ECB President Jean-Claude Trichet has stressed that a recovery would be “uneven."
The euro's rise in value against the dollar has stirred up a headwind for exports from eurozone countries, while domestic consumption remains fragile amid fears that unemployment could climb higher in 2010.
The US Federal Reserve and the ECB "still harbour doubts about the pace of recovery and expect only lackluster growth in the medium term," Commerzbank economists said in a research note.
But the ECB has also warned banks to brace for the end of “enhanced credit support," which expanded after the US investment bank Lehman Brothers collapsed in September 2008.
ECB governing council member Axel Weber, who is also the German central bank governor, commented last week that dependence on central bank funds was "certainly not a sustainable business model."
"Banks should prepare for the progressive withdrawal of medicine administered by central banks," Weber said.
The main feature of ECB support has been the supply of unlimited amounts of cash at its benchmark rate for periods of up to a year, aimed at keeping credit flowing through eurozone banks to the wider economy.
Reaching a peak in June with one-year loans of 442 billion euros (655 billion dollars) -- the largest volume of funds ever provided in a single step -- the policy has helped bring down interbank lending rates.
But banks have been slow to relay much of the credit to businesses and households, saying that demand has fallen as a result of the global downturn.
In September, eurozone lending to the private sector contracted for the first time on record, though an ECB bank lending survey showed later that banks could begin easing credit standards soon and that demand for home mortgages was firmer.
The economic think tank IFO said Friday that the credit hurdle in Germany, the eurozone's largest economy, was slightly lower in October though large firms found it harder than smaller ones to secure loans.
As a first step in what is called an "exit strategy" for unorthodox measures, the ECB could announce that its next 12-month refinancing operation in December could be the last, and/or that it will begin to charge more than 1.0 percent for central bank funds.
But Weber implied that the policy of granting all requests for funds, also an exceptional measure, would likely be continued even after the length of time they are loaned for was cut back towards the previous maximum of three months.
www.timesofoman.com
воскресенье, 12 апреля 2009 г.
The Week Ahead Europe & UK: Markets to Focus on U.S. Due to Light Schedule
(CEP News) The week ahead is on the light side for the UK and the euro zone, with many market participants admitting to looking towards the economic releases across the Atlantic to dictate market strategy.
Next week, US economic data will be in the focus of financial markets, said Dr. Joerg Kraemer at Commerzbank. High inventory levels, plunging exports and moribund domestic demand are pointing to further production cuts in US industry whilst capacity utilization has fallen to its lowest level in the past 40 years.
According to the economics department at UBS, the release of final euro zone consumer price index (CPI) data should draw some attention, with economists expecting no revisions to headline CPI. It is projected to have risen 0.4% month-over-month and an annualized 0.6%.
Although the data for headline inflation are final readings, this will be the markets first look at core CPI for March, says the UBS report. Annual core CPI is expected to fall to a 1.4% level in March from 1.7% the month prior.
(CEP News) The week ahead is on the light side for the UK and the euro zone, with many market participants admitting to looking towards the economic releases across the Atlantic to dictate market strategy.
Next week, US economic data will be in the focus of financial markets, said Dr. Joerg Kraemer at Commerzbank. High inventory levels, plunging exports and moribund domestic demand are pointing to further production cuts in US industry whilst capacity utilization has fallen to its lowest level in the past 40 years.
According to the economics department at UBS, the release of final euro zone consumer price index (CPI) data should draw some attention, with economists expecting no revisions to headline CPI. It is projected to have risen 0.4% month-over-month and an annualized 0.6%.
Although the data for headline inflation are final readings, this will be the markets first look at core CPI for March, says the UBS report. Annual core CPI is expected to fall to a 1.4% level in March from 1.7% the month prior.
среда, 8 апреля 2009 г.
German and French exports drop
BERLIN (Reuters) - German exports fell for a fifth month running in February and in France exports dropped by more than a fifth on the year, aggravating recessionary pressures in the euro zone's two biggest economies as global trade slows sharply.
German exports fell by 0.7 percent on the month and figures for January were revised down to show a 7.4-percent slump, compared to 4.4 percent originally reported. Unadjusted exports dropped by 23.1 percent on the year in February and imports fell 16.4 percent.
Adding to the bleak news out of Germany, Europe's largest economy, a sharp drop in domestic demand led a steeper-than-expected 3.5-percent fall in manufacturing orders in February, Economy Ministry data released on Wednesday showed.
"The fall in incoming orders in Germany is unprecedented. In just six months (since August last year) orders are down by 33.3 percent," Citigroup economist Juergen Michels wrote in a research note.
Continued...
BERLIN (Reuters) - German exports fell for a fifth month running in February and in France exports dropped by more than a fifth on the year, aggravating recessionary pressures in the euro zone's two biggest economies as global trade slows sharply.
German exports fell by 0.7 percent on the month and figures for January were revised down to show a 7.4-percent slump, compared to 4.4 percent originally reported. Unadjusted exports dropped by 23.1 percent on the year in February and imports fell 16.4 percent.
Adding to the bleak news out of Germany, Europe's largest economy, a sharp drop in domestic demand led a steeper-than-expected 3.5-percent fall in manufacturing orders in February, Economy Ministry data released on Wednesday showed.
"The fall in incoming orders in Germany is unprecedented. In just six months (since August last year) orders are down by 33.3 percent," Citigroup economist Juergen Michels wrote in a research note.
Continued...
Eurozone's GDP revised downwards
The eurozone economy shrank more than previously estimated in the last three months of2008, official figures say.
Gross domestic product in the 15-nation area fell 1.6%, not 1.5% as previously thought, said the EU's Eurostat office.
The euro declined against the dollar to $1.3270 from $1.3330 after the figures came out, amid fears the economy could contract even further in 2009
понедельник, 6 апреля 2009 г.
Euro Zone Producer Prices Fall at Speeds Unseen Since 1999
(CEP News) Frankfurt - Euro zone producer prices surprised to the downside in February, adding to mounting evidence that inflationary pressures are easing in the monetary union.
Eurostat reported that euro zone producer price fell 1.8% in the 12 months to February, outdoing both the 1.5% decline expected and January's 0.7% contraction. Meanwhile, January's figure was revised down from an initial estimate of -0.5%. February's annualized fall is the most pronounced recorded since April 1999.
Energy price decline led the way in PPI falls, contracting 4.5% year-over-year, followed by intermediate goods prices, which slipped 3.0%. Conversely, both capital goods and durable consumer goods costs rose in the year at 1.8% and 2.0% respectively.
Between January and February, producer prices fell 0.5% as expected following the previous month's 1.1% decrease, revised down from -0.8%.
The strongest decline was noted in intermediate goods, the price for which fell 0.9% between January and February. Energy prices slipped 0.7% over the same period, while non-durable consumer goods contracted 0.3%.
Eurostat reported that euro zone producer price fell 1.8% in the 12 months to February, outdoing both the 1.5% decline expected and January's 0.7% contraction. Meanwhile, January's figure was revised down from an initial estimate of -0.5%. February's annualized fall is the most pronounced recorded since April 1999.
Energy price decline led the way in PPI falls, contracting 4.5% year-over-year, followed by intermediate goods prices, which slipped 3.0%. Conversely, both capital goods and durable consumer goods costs rose in the year at 1.8% and 2.0% respectively.
Between January and February, producer prices fell 0.5% as expected following the previous month's 1.1% decrease, revised down from -0.8%.
The strongest decline was noted in intermediate goods, the price for which fell 0.9% between January and February. Energy prices slipped 0.7% over the same period, while non-durable consumer goods contracted 0.3%.
суббота, 4 апреля 2009 г.
пятница, 3 апреля 2009 г.
Sterling jumps on stronger services PMI data
LONDON, April 3 (Reuters) - Sterling jumped against other major currencies on Friday, hitting a seven-week high against the dollar, after a higher-than-expected reading in service sector data.
The pound was on track for its biggest weekly gain against the dollar since early February, and was also extending a 3-day winning streak against the dollar on improved risk sentiment globally and some brighter UK economic data.
The pound was on track for its biggest weekly gain against the dollar since early February, and was also extending a 3-day winning streak against the dollar on improved risk sentiment globally and some brighter UK economic data.
четверг, 2 апреля 2009 г.
German Jan.-Feb. Import Prices Down 0.1% On Year
(RTTNews) - German Jan.-Feb. Import Prices Down 0.1% On Year
G20 Commits to Ambitious Stimulus Plan Extending Into 2010
(CEP News) - The G20 will stand together to engage in additional stimulus plans aimed at creating jobs, cleaning up financial institutions and stimulating emerging market economies, according to the communiqué released on Thursday.
Member nations said total stimulus spending will reach $5 trillion by the end of 2010, and that they will add an additional $1 trillion in global stimulus through the IMF and other international agencies.
ECB cuts interest rates by 25bps
Eurozone interest rates cut to 1.25%
The European Central Bank has cut official interest rates further as it steps up its efforts to combat Europe’s recession, but it has stopped short of entering zero interest rate territory.
The ECB said its main policy interest rate would fall from 1.5 per cent to 1.25 per cent, the lowest ever. The cut was smaller than financial markets expected. But it sends a signal that the central bank remains wary of following the example of the US Federal Reserve, which has cut official interest rates to virtually zero
The European Central Bank has cut official interest rates further as it steps up its efforts to combat Europe’s recession, but it has stopped short of entering zero interest rate territory.
The ECB said its main policy interest rate would fall from 1.5 per cent to 1.25 per cent, the lowest ever. The cut was smaller than financial markets expected. But it sends a signal that the central bank remains wary of following the example of the US Federal Reserve, which has cut official interest rates to virtually zero
Longer ECB Loans Come With a ‘Snag,’ Economists Say
April 2 (Bloomberg) -- The European Central Bank would have to signal that interest rates won’t fall any further if it decides today to offer banks longer-term loans, economists said.
Four ECB policy makers including Vice President Lucas Papademos have indicated the bank may lengthen the maturities of its loans to banks from the current six-month limit to ease credit tensions. That’s stoked speculation the move could come as soon as today, when officials meet in Frankfurt to decide on rates.
Four ECB policy makers including Vice President Lucas Papademos have indicated the bank may lengthen the maturities of its loans to banks from the current six-month limit to ease credit tensions. That’s stoked speculation the move could come as soon as today, when officials meet in Frankfurt to decide on rates.
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BANK of England Monetary Policy Committee member David Blanchflower has warned that the number of people unemployed is likely to break the three million barrier by the end of 2009.
Mr Blanchflower said he was concerned that global demand and global trade were contracting sharply, which was pushing unemployment up.
Mr Blanchflower said he was concerned that global demand and global trade were contracting sharply, which was pushing unemployment up.
среда, 1 апреля 2009 г.
Euro Zone March Manufacturing PMI Rebound In March
(CEP News) Frankfurt - Euro zone manufacturing activity declines slowed in March after falling at record speeds in February, suggesting that the worst has passed in terms of contraction.
On Wednesday, Markit Economics reported that the euro zone manufacturing purchasing managers index rose modestly to 33.9 in March after falling to an all-time low 33.5 in February, reflecting that the contraction in manufacturing activity had eased.
Advance estimates had suggested a slightly better reading of 34.0 for the month.
On Wednesday, Markit Economics reported that the euro zone manufacturing purchasing managers index rose modestly to 33.9 in March after falling to an all-time low 33.5 in February, reflecting that the contraction in manufacturing activity had eased.
Advance estimates had suggested a slightly better reading of 34.0 for the month.
German Feb New Plant, Machinery Orders -49% On Year -VDMA
FRANKFURT (Dow Jones)--New orders for Germany's plant and machinery industry plunged 49% on the year in February, industry group VDMA said Wednesday.
Domestic orders slipped 45%, while foreign orders were down 50% in February against the same month of 2008, VDMA said in a statement.
The data are another sign that activity in the euro zone's largest economy is slowing.
VDMA also said it expects machinery production to fall by between 10% and 20% in real terms in 2009.
"Of course, the fact that we have to lower our forecast after six weeks again, is also extremely disappointing for us," said VDMA Managing Director Hannes Hesse in the statement. "But the dramatic fall in orders and in turnover doesn't leave us with any choice," he said.
VDMA said Feb. 10 that it expected production to shrink by 7% in 2009 after an increase of 5.4% in 2008.
In the three-month period from December 2008 to February 2009, which balances out some monthly fluctuations, orders were down by 44% on the year, VDMA said. Domestic orders were down 38% and foreign orders by 46% on the year in the period, it added.
Автор: Jeck на 1:48
Domestic orders slipped 45%, while foreign orders were down 50% in February against the same month of 2008, VDMA said in a statement.
The data are another sign that activity in the euro zone's largest economy is slowing.
VDMA also said it expects machinery production to fall by between 10% and 20% in real terms in 2009.
"Of course, the fact that we have to lower our forecast after six weeks again, is also extremely disappointing for us," said VDMA Managing Director Hannes Hesse in the statement. "But the dramatic fall in orders and in turnover doesn't leave us with any choice," he said.
VDMA said Feb. 10 that it expected production to shrink by 7% in 2009 after an increase of 5.4% in 2008.
In the three-month period from December 2008 to February 2009, which balances out some monthly fluctuations, orders were down by 44% on the year, VDMA said. Domestic orders were down 38% and foreign orders by 46% on the year in the period, it added.
Автор: Jeck на 1:48
Blanchflower says unemployment to rise
LONDON (Reuters) - Bank of England Monetary Policy Committee member David Blanchflower warned on Wednesday that the major pain of rising unemployment has yet to be felt in the economy and said those calling for more stimulus were right.
Blanchflower said that while inflation was not a big concern right now, a major worry was that global demand and global trade were contracting sharply, pushing unemployment up.
"Those leaders pushing for a substantial fiscal stimulus are right," he wrote in a commentary in the Daily Telegraph.
Blanchflower said that while inflation was not a big concern right now, a major worry was that global demand and global trade were contracting sharply, pushing unemployment up.
"Those leaders pushing for a substantial fiscal stimulus are right," he wrote in a commentary in the Daily Telegraph.
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