EUR Forex Weekly Archive
Daily Economic News - Apr 30, 2008
The EUR hit a 4 week low vs. the greenback yesterday as poor economic data from the Euro zone dented the ECB hawkish monetary policy sentiment. The European currency also slid following the greenback's appreciation on views that the U.S. rate cutting cycle could end soon.
By the end of the day, the EUR was down 0.6% and traded at 1.5559, having earlier hit a low of 1.5542 against the USD. Retail sales fell almost across all of the Euro member states with only Germany showing its Consumer Confidence figures up, as was seen on Monday. Higher food prices led to sales of food falling in Europe by the fastest rate in more than 2 years. This suggests that Retail Sales across the region will probably see a similar decline. French Consumer Confidence also fell to its lowest since 1987, adding to a view that the Euro zone economy isn't insolated from problems pushing the U.S. economy to the verge of recession. The accelerating European inflation continues to squeeze consumer income. The strong EUR dampens exports. Low exports contribute to a growth slowdown which places the ECB under pressure to lower rates. While markets are expecting a slightly hawkish tone from the US FOMC's statement accompanying the rate decision, poor economic data from the Euro zone raises doubts on the ECB's ability to maintain its tough stance on inflation and Interest Rates. The only thing that can possibly trigger a meaningful turn in the single currency is the Interest Rate cut by the European Central Bank. If economic data deteriorates even further, the central bank may have to seriously consider this possibility.
German unemployment is due today and we expect the employment numbers to be unchanged. Later the Consumer Confidence, the Italian CPI and the European Unemployment Rate are also scheduled for release. Most of these indices are expected to set relatively weak figures. Overall, the EUR is expected to remain resilient as traders are expected to exercise caution ahead of Friday's US fundamental announcements. A bullish movement against the greenback will probably resume only after the weekend. From the 'long range' perspective, as long the Interest Rate differential between the U.S and Europe continues to widen, the EUR will remain the preferred currency amongst traders.
Daily Economic News - Apr 29, 2008
The EUR saw falling trends against its major counterparts yesterday, following a negative 0.2% decline in the German Consumer Price Index. Forecasts had the German CPI rising 0.2% this month after a previous 0.5% increase in March, however results were surprisingly worse than expected and the EUR had a bearish trend against the USD, slightly falling to the 1.5650 range after ending the previous trading day at a day high of 1.5680. President of the European Central Bank, Jean-Claude Trichet reiterated in a speech yesterday that the ECB considers that its current monetary policy stance, with its main interest rate at %4, will help achieve its medium-term price stability target and anchor long-term inflation expectations. Trichet pointed out that the ECB has injected a large amount of liquidity into the money market to ease tensions, yet it is focused on containing the inflation and will avoid changing its monetary policy stance and it seems that the interest rate will remain unchanged. It should be pointed out that the German Consumer Confidence did beat expectations and was announced at a rate of 5.9 vs. forecasts of 4.6; nonetheless this positive announcement was not enough to help the EUR rise after subpar German CPI results.
As for today, there are no significant economic results expected to be announced for the EUR currency. Traders should keep a close look at the result of the U.S. Consumer Confidence Index, which is expected to weaken compared to last month's results, and might reach one of its lowest readings in the last 5 years. If the Index declines significantly, the EUR will pick up a bullish trend against the USD. On the EUR's behalf, European Central Bank's Vice-President, Lucas Papademos will hold a press briefing in Frankfurt to present the second annual report on "Financial Integration in Europe", which should hint at the European Union's expectations of its economic growth.
Daily Economic News - Apr 28, 2008
Last Wednesday the EUR reached a new all time record, rising as high as 1.6017 vs. the USD. That move took place after 3 bullish days for the 15-nation currency, mainly due to strong German data releases. However, between Wednesday and Friday, the EUR lost 2.7% of its value after weak indicators release increased inflation speculations from the Euro-zone. The EUR bearish movement came also as a result of strong economic data coming from the US. Recent positive US fundamental printings contributed to a stronger dollar momentum especially vs. the EUR.
The only important data released on Friday was March's German Import Price Index, which came out well above the expectations of 1.1%. This indicator, combined with the previous CPI and PPI reports from the Euro-zone countries, depicts a rather melancholic picture regarding the inflation rate in Europe, leaving investors with no choice but to go short on the EUR. As a result, the EUR/USD pair locked the session at the rate of 1.5627, losing 0.7% on Friday alone.
Looking ahead, this week will supply traders with many figures that may allude to the size of the impact of the US financial crisis over the Euro-zone economy, and could give traders a vision of the EUR direction for the short term. Today, March's CPI report is due to be published. The report is expected to show an extremely high rate of inflation in the Euro zone, 3.5% higher than last year's. Aside from that, traders should mainly focus on U.S developments. The U.S has a bundle full of data planned for this week. Traders should stay keen as this week is expected to turn extremely volatile.
