eurozone Archives - MKTPlace

German Business Confidence Rises in February: Ifo

Market Place — Tue, 24 Feb 2015 07:00:52 +0000

German business confidence improved again in February, rising for the fourth consecutive month in the latest sign Europe’s largest economy was recovering from last year’s third quarter slump.

The business climate index, which is derived from a monthly survey of 7,000 companies, rose to 106.8 from 106.7 in February, the Munich-based Ifo Institute reported on Monday. Economists forecast a bigger rise to 107.7.

The assessment of the current business climate improved further in February, rising to 102.5 from 102.0. The current assessment index declined slightly to 111.3 from 112.7.

“Satisfaction with the current business situation decreased somewhat, but companies expressed greater confidence in future business developments,” said Ifo president Hans-Werner Sinn in a press release. “The German economy is proving robust in the face of geopolitical uncertainty.”

Business conditions improved somewhat in manufacturing, with the six-month business outlook reaching its highest level since August 2014. Business conditions in wholesaling and construction deteriorated slightly this month, Ifo data showed.

The figures provided added assurance that Europe’s largest economy was regaining momentum despite geopolitical uncertainties, euro area deflation and the growing threat of a Greek default.

Germany’s gross domestic product rebounded sharply in the fourth quarter of last year, growing 0.7 percent. That was more than double the rate of forecasts and well above the Q3 rate of just 0.1 percent. Year-on-year, Germany’s economy grew 1.6 percent. The Federal Statistics Office will release updated fourth quarter GDP figures on Tuesday.

According to analysts, Germany is on pace for around 0.4 percent quarterly growth in the first three months of 2015, having benefited from cheap oil and a weaker euro. However, the German economy is expected to remain subdued this year, according to a January forecast by the International Monetary Fund. The international lending institution said it expects Germany to grow only 1.3 percent in all of 2015, followed by a 1.5 percent growth pace next year. By comparison, euro area growth will average only 1.2 percent this year and 1.4 percent next year.

Eurozone GDP disappointed in the fourth quarter, growing only 0.3 percent quarter-on-quarter. France expanded only 0.1 percent, while Italy stagnated and Greece slipped back into contraction.

The euro was back on its heels Monday, touching an intraday low of 1.1294 US. It would subsequently consolidate at 1.1323 US, declining 0.5 percent.

The euro also declined against the British pound, falling 0.65 percent to 0.7348 GBP.

Market Place

MKTPlace is a leading digital and social media platform for traders and investors. MKTPlace offers premiere resources for trading and investing education, digital resources for personal finance, news about IoT, AI, Blockchain, Business, market analysis and education resources and guides.

EUR/USD Weekly Outlook

Market Place — Mon, 23 Feb 2015 09:03:52 +0000

The euro was trading cautiously on Monday, following a week of uncertainty that ended with Greece securing a short-term loan extension in exchange for further oversight from its creditors and other reforms that squashed Athens’ “anti-austerity” pledge. The attention this week shifts back to the economic data, although the threat of an eventual Greek exit from the Eurozone remains in the background.

The EUR/USD was trading at 1.1368 in the early Asian session, down 0.13 percent. The pair faces initial support at 1.1294 and resistance at 1.1445. The euro advanced slightly against its US counterpart last week, but ended on a sour note following the details of the Greek loan extension. The pair briefly fell below 1.13 on Friday before recovering.

Several batches of high profile data are on the docket this week, headlined by Germany. On Monday the IFO Institute will release the business climate index, a closely followed indicator for economic development in Germany. The business climate index is forecast to rise to 107.7 from 106.7, adding further evidence the German economy was regaining momentum following a midyear slump.

On Tuesday the Federal Statistics Office is expected to confirm Germany’s Q4 GDP growth at 0.7 percent, unchanged from the preliminary estimate. Year-on-year, this translates into an annualized gain of 1.6 percent. Fourth quarter growth more than doubled forecast and was a significant improvement over the third quarter’s 0.1 percent uptick.

Separately, Eurostat will post final Eurozone CPI figures for January. Eurozone consumer prices plunged 0.6 percent annually in January, the sharpest decline since July 2009, Eurostat reported last month in a preliminary estimate.

On Thursday Germany will publish official employment figures for February. The number of workers unemployed is forecast to drop by another 10,000 in February. The unemployment rate is forecast to hold at 6.5 percent.

Separately, Eurostat will release several economic indicators on Thursday, including business confidence, industrial confidence and economic sentiment.

Germany and other Eurozone member states will close out the week with preliminary estimates of February CPI. Germany’s harmonized index of consumer prices declined 0.5 percent in January, the first time in more than five years inflation turned negative for Europe’s largest economy.

Eurozone inflation will probably remain negative in the first half of the year before gradually recovering later on, aggravating concerns about the currency bloc’s nascent recovery. Persistently weak inflation also raises concerns about the ECB’s €1 trillion bond buying program, which has designed to shore up consumer prices and promote economic growth.

The ECB will hold its next monetary policy meetings in early March.

Market Place

Eurozone Finance Ministers Resume Greece Bailout Talks as EU Deadline Approaches

Market Place — Wed, 18 Feb 2015 16:15:16 +0000

The financial markets were on edge on Tuesday, as the pressure mounted on Eurozone finance ministers to reach an agreement over Greece’s loan program.

Greek and Eurozone finance ministers resumed talks in Brussels on Tuesday, where a war of words between Greece and Germany escalated, stoking concerns both sides were still far apart on a settlement. The European Union has given Greece until the end of the week to extend its current bailout program or risk losing financial aid. Athens has vowed not to extend the current bailout program and is seeking a six-month bridging loan to finance essential government activities. Greece’s €240 billion bailout program is due to expire on February 28.
Greece’s newly elected Prime Minister Alexis Tsipras said on Tuesday his government would give in to “blackmail” and would instead begin to enact new laws to reverse the bailout conditions. Tsipras told his Syriza party that the government would not compromise with Greece’s troika of lenders.

“We are not in a hurry and we will not compromise,” Tsipras told his far-left party’s lawmakers.

He added, “We are working hard for an honest and mutually beneficial deal, a deal without austerity, without the bailout which has destroyed Greece in recent years, a deal without the toxic presence of the troika.”

German finance minister Wolfgang Schaeuble reiterated his take-it-or-leave-it message, putting the pressure squarely on Athens to extend the troika’s loan program.

“The question still remains if Greece wants a program at all or not,” Schaeuble told reporters in Brussels after a second day of meetings.

Dutch finance minister and Eurogroup president Joroen Dijsselbloem echoed Shaeuble’s words and insisted that Athens seek an extension.

“It’s really up to the Greeks. We cannot make them or ask them,” he stated.

While the prospects of an agreement remain dim, the European Central Bank is not expected to cut off funding to cash-strapped Greek banks this week, according to sources. The ECB insists that Greece will remain part of the euro.

The euro rebounded on Tuesday, as investors disregarded the latest collapse in Greece bailout talks after German investor sentiment reached a 12-month high in February. ZEW’s economic sentiment index climbed 4.6 points to 53.0, as the current situation sub-index more than doubled to 45.5.

The EUR/USD climbed to an intraday high of 1.1445 on Tuesday. It would subsequently consolidate at 1.1394, advancing 0.45 percent.

The euro also rebounded against the British pound, as the EUR/GBP rose 0.54 percent to 0.7426.

Market Place

EUR/USD Loses 1.14 Handle as Eurogroup Talks Yield No Results

Market Place — Wed, 18 Feb 2015 07:00:07 +0000

The euro declined against its US counterpart Monday after Greek and Eurozone finance ministers were unable to reach an agreement about Greece’s bailout program, fuelling concerns the Hellenic republic was edging closer to exiting the currency zone.

The EUR/USD tumbled nearly 80 pips to an intraday low of 1.1319. It would subsequently consolidate at 1.1342, declining 0.45 percent. The pair is testing the initial support at 1.1344. A break below that level would send the pair below the 1.13 mark. On the upside, initial resistance is likely found at 1.1435.

European finance ministers met in Brussels on Monday to negotiate Greece’s debt obligations. Negotiations fell through last week after both sides failed to reach common ground. Under the authority of newly elected Prime Minister Alexis Tsipras, Athens is seeking to restructure its massive €240 billion bailout package, which includes a bridging loan to fund the cash-strapped government over the next six months. Greek finance minister Yanis Varoufakis has stated that, unlike the existing bailout program, Greece would not accept demands for economic reforms attached to any bridging loan, and would only negotiate these terms after Greece’s public finances got some relief.

Monday’s meetings were unsuccessful, according to a Greek government official. Athens reportedly has only three weeks of cash left, placing added pressure on the country’s cash-strapped banks. Additionally, the European Central Bank will continue to offer emergency assistance only if it is tied to the existing bailout deal, which expires at the end of the month.

Varoufakis has remained defiant throughout the negotiations, having recently published a scathing op-ed in The New York Times titled “No Time for Games in Europe.”

“The lines that we have presented as red will not be crossed. Otherwise, they would not be truly red, but merely a bluff,” Varoufakis wrote in an op-ed that was published on February 16.

He added, “No more loans – not until we have a credible plan for growing the economy in order to repay those loans, help the middle class get back on its feet and address the hideous humanitarian crisis.”

Greece’s GDP has declined 25 percent since the Great Recession. The economy contracted in the fourth quarter of last year after posting three consecutive quarters of growth. The unemployment rate remained at 25.8 percent in November, Elstat reported last week. That’s a slight improvement over November 2013 levels, when unemployment was 27.7 percent.

Market Place

EUR/USD Edges Higher Amid Greek Bailout Talks, Disappointing US Data

Market Place — Sat, 14 Feb 2015 07:00:10 +0000

The EUR/USD advanced for a second consecutive day on Friday as Greece resumed talks with its Troika of creditors, while the US dollar continued to retreat following disappointing retail sales data.

The EUR/USD climbed 0.12 percent to 1.1413, easing off an earlier high of 1.1445. The pair is pacing toward a weekly gain of 0.75 percent. Near-term support is likely found at 1.1325. On the upside, initial resistance is likely found at 1.1461. A break above this level would expose 1.15.

Talks between Greece and its international creditors resumed on Friday in an effort to keep the country financed after February 28, the deadline for the current bailout program. Eurozone finance ministers will hold a second round of talks on Monday. Negotiations broke down earlier this week after Greece and its Eurozone counterparts failed to establish common ground on a new agreement.

Meanwhile, a fresh wave of violence broke out in eastern Ukraine after European leaders agreed to a peace deal in Minsk earlier this week, as rebel forces and Ukrainian troops fought for control over the strategic town of Debaltseve.

Growing instability in Ukraine could dampen near-term support for the euro and other “riskier” assets, as investors opt for the security of safe-haven assets like gold and the Japanese yen.

In economic data, Eurozone GDP rose faster than forecast in the fourth quarter, generating cautious optimism about the region’s nascent recovery. Eurozone GDP rose 0.3 percent quarter-on-quarter and 0.9 percent annually, official data showed. The gains were spearheaded by Germany, which rebounded sharply in the fourth quarter, growing at an annual rate of 1.6 percent.

The struggling Greek economy contracted in the fourth quarter, declining 0.2 percent.

Meanwhile, US data continued to disappoint on Friday, as consumer confidence tumbled from January’s 11-year high. The Thomson Reuters/University of Michigan consumer sentiment index dipped to 93.6 in February from 98.1 in January. A median estimate of economists called for no change.

American consumers are concerned about rising oil prices and were generally less upbeat about the labour market after hearing about layoffs in the oil and gas sector. Consumers’ appraisal of the current situation declined to 103.1 from 109.3, while the barometer of future expectations decreased to 87.5 from 91.

The greenback was generally weaker across the board on Friday. The US dollar index declined further to 94.04, falling 0.05 percent. The index is down 1 point from Wednesday’s high of 95.09.

Market Place

EUR/USD Holds Ground as Political Tensions Escalate

Market Place — Tue, 10 Feb 2015 07:00:53 +0000

The euro was little changed against the US dollar on Monday, trading above 1.13 cents US ahead of the European Union meetings in Brussels. The meetings, which will be held on Wednesday, will be attended by newly appointed Greek Prime Minister Alexis Tspiras and German Chancellor Angela Merkel.

The EUR/USD climbed 0.06 percent to 1.1326. The pair is likely supported at 1.1259. Resistance is ascending from 1.1435.

Risk-off trading was the norm on Monday, as investors digested latest comments from the newly appointment Greek Prime Minister, who on Sunday outlined plans to dismantle the Troika’s “cruel” austerity plan. Tspiras said he would not extend Greece’s €240 billion bailout plan set to expire at the end of the month, setting the stage for a political standoff with the country’s European lenders.

European Commission President Jean-Claude Juncker fired back on Monday, telling Greece the supranational institution would not bow to its demands.

“Greece should not assume that the overall mood has so changed that the Eurozone will adopt Tspiras’ government program unconditionally,” Juncker said in Germany on Monday.

Tspiras’ far-left coalition swept to power last month on a platform of “anti-austerity,” promising voters to raise the minimum wage, cut taxes and negotiate a new bailout agreement with international creditors. The Syriza party secured 36 percent of the vote and 149 of 300 parliament seats.

Meanwhile, escalating violence in Ukraine continued to weigh on market sentiment, driving investors to safe haven assets like the Japanese yen and gold. At least 45 Ukrainian soldiers and 11 pro-Russia fighters have been killed in renewed violence in the eastern part of the country, prompting the EU to postpone Russia sanctions ahead of the Minsk summit. German Chancellor Angela Merkel arrived at the White House on Monday to meet with US President Barrack Obama around the issue of whether to arm the Ukrainian government against Russian separatists.

In economic data, Germany’s trade surplus widened more than forecast in December, capping off a record year for international trade and signaling that Europe’s largest economy was improving. Germany’s trade surplus reached €217 billion in 2014, shattering the previous record of €195.3 billion. The country posted a surplus of €21.8 billion in December, up from €18.3 billion in November and compared with the consensus forecast of €17.9 billion. Exports rose 3.4 percent, while imports declined 0.8 percent from November, official data showed. Economists forecast exports to rise only 1 percent in December.

Market Place