Archives of “Euro” tag

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Euro Stoxx index falls for the first time in 11 trading sessions

  
Analysis, Global Indices
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European indices move lower today

The major European indices have closed lower today.

  • The Euro Stoxx index fell for the first time in 11 trading sessions (10 higher closes).
  • The German Dax came off of a record levels.
  • The France’s CAC could not reach its all-time high from 2000
A look at the provisional closes shows:
  • German DAX, -0.5%
  • France’s CAC, -0.9%
  • UK’s FTSE 100, -1.0%
  • Spain’s Ibex, -0.83%
  • Italy’s FTSE MIB, -0.85%
The Euro Stoxx index fell -0.7%.
In other markets as London/European traders look to exit:
  • Spot gold plus $5.50 or 0.32% at $1784.85.
  • Spot silver is up for cents or 0.21% $23.75
  • WTI crude oil futures are down $0.35 or -0.49% at $67.60
  • bitcoin is trading down $773 at $46,248. The digital currency traded above $48,000 today
In the US stock market, the major indices are lower but off their lowest levels:
  • Dow is down -79 points or -0.22% at 35436
  • S&P index is down -16.29 points or -0.36% at 4451.53
  • NASDAQ is down 125 points -0.85% 14697.65
In the forex market, the CHF is now the strongest of the majors while the CAD remains the weakest. The USD is mixed with gains vs the CAD, AUD and NZD and declines vs the JPY and CHF. The greenback is near unchanged levels vs the EUR and GBP.

Lagarde: There is no need to overreact to euro gains

  
  Analysis
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Comments from Lagarde in the ECB opening statement:

Lagarde Sept 10
  • Says ECB will monitor FX rate
  • Strength of recovery remains surrounded by uncertainty
  • Rebound broadly in line with previous expectations
  • Domestic demand recorded significant recovery
  • Uncertainty weighing on consumer spending and business investment
  • Inflation dampened by energy prices
  • Ample monetary stimulus remains necessary
  • Incoming data suggest notable recovery in consumption
  • ECB will carefully assess the euro’s effect on inflation
  • New infections are a headwind to the short term outlook
  • Repeats that an ample degree of easing needed
  • Fiscal measures should be targeted and temporary
The euro jumped to 1.1891 from 1.1850 on the headline from Lagarde.

CFTC commitments of traders: EUR longs spike by 32K to a record long level

  
Analysis, Forex
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Weekly FX speculative positioning data from the CFTC

 

  • EUR long 157K vs 125K long last week. Longs increased by 32K
  • GBP short 25K vs 15K short last week. Shorts increased by 10K
  • JPY long 29K vs 19K long last week. Longs increased by 10K
  • CHF long 8K vs 7K long last week. Longs increase by 1K
  • AUD short 5K vs 0K long last week. Shorts increased by 5K
  • NZD short 1K vs 2K last week. NZD switches from long to short. 3K change
  • CAD short 13k vs 17K short last week. Shorts trimmed by 4K
Highlights:
The BIG HIGHLIGHT for the week is in the EUR.  The EUR longs spiked up by 32K to 157K in the current week to a record high for long positions. The move higher is corresponding to higher EURUSD prices. The price of the EURUSD has been up for 6 consecutive weeks.  The long position started to move more to the upside during the May 19 week when the position was at 72K.  The EURUSD during that week was down at 1.0800. The price high today reached to 1.1908 before backing off.  Nice trade for the longs.
Of course, a concern for markets that get too long or short, is that there can be a squeeze the other way if prices start to lose trend momentum.   As a result, be careful of too much of a good thing, but let the technicals tell the story. They have been bullish.
Weekly FX speculative positioning data from the CFTC_
The GBP shorts, however, increased by 10K to 25K (still much lower than the EUR longs) while the currency has moved higher.
The JPY longs increased and the USDJPY moved down (higher JPY) into early trading today. However, the price snapped back higher and nearly erased the full move lower this week in a single day.

The euro is off and running. Levels to watch

  
Analysis, Forex
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EUR/USD up 92 pips today

The euro cracked 1.17 in Asia and has continued to run higher, hitting 1.1764 as New York arrived before pulling back to 1.1747 at the moment. Today’s durable goods orders report hasn’t been a factor.
The impetus for the seven-day run in the euro was a successful European recovery fund negotiation. At the same time, the US is struggling with COVID-19 and European economies are closer to normalcy with virus counts low (although some hotspots are appearing).
Overbought indicators are obviously flashing warning signs for the euro but there is still a lot to like. 1.17 isn’t particularly high and assets in Europe are still relatively cheap. Carry is dead almost everywhere so that’s not going to be a big drag.
I’ll keep it simple on the technicals and highlight the June and Sept 2018 highs at 1.1852 and 1.1815 as resistance. I like the euro against the US dollar but the risk-reward at the moment is mediocre.
EUR/USD up 92 pips today

ECB leaves rates unchanged, as expected

  
  Analysis
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ECB continues to reiterate stands ready to adjust all of its instruments

ECB continues to reiterate stands ready to adjust all of its instruments
  • Full statement
  • Prior statement
  • Interest rates to remain at present or lower until it has seen inflation outlook robustly converge to a level sufficiently close to but below 2% within its protection horizons (repeat)
  • No change to rate tiering multiplier
  • Will continue purchases under PEPP with a total envelope of 1,350B euros
  • Will continue to fully invest maturing securities at least through end-2022
  • PEPP will run at least through end of June 2021
  • The ECB cites ‘very high takeup’ of TLTRO-III
  • In its June forecast the ECB saw GDP down 8.7% in 2020 and up 5.2% in 2021
There are no changes here whatsoever. The euro chopped around 1.1400 on the release but has ticked up to 1.1410 since.

Risk ahead for the EURO this week

  
Analysis, Forex
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ECB policy review and European summit

German bunds were trading at -0.46% yesterday on the 10 year chart which is 10bps lower than a Bloomberg modelled curve mentioned on the Bloomberg Live Blog yesterday. This is most likely due to positioning ahead of the European Council’s summit.

On Friday and Saturday of this week EU policy makers will meet to discuss the proposed €750 billion recovery plan.The big questions is whether nations like Austria, Denmark, Sweden, Netherland and Finland will block the plan. The  issue is that these countries are opposed to the idea of large handouts on principle.However, despite their reluctance, the present crisis means their reticence may be seen as mean spirited in a time of shared humanitarian crisis. The pressure is for the countries concerned about the ideas of grants rather than loans to approve this proposed fund.On July 10 we had a German official state that Netherlands is unlikely to block the EU recovery fund which is supportive of the fund being accepted.

On Thursday we have the ECB rate meeting with little change expected. With the PEPP program increasing by €600 billion euros last month  it is unlikely that we see any changes to the PEPP program on Thursday.

The risk

If the recovery fund is rejected by the frugal four expect immediate downside for the EUR. However, given that the second day of the meeting is taking place over the weekend this is going to be weekend risk for the EUR.

ECB policy review and European summit

ECB: Euro area GDP could shrink by 5% to 12% this year

  
  Analysis
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ECB notes in a pre-release of its economic bulletin

ECB
  • Euro area real GDP could fall by around 5% (mild scenario), 8% (medium scenario), and 12% (severe scenario) this year
  • Under the severe scenario, Q2 quarterly real GDP growth could be -15%, followed by a protracted and incomplete recovery; +6% in Q3, +3% in Q4
  • Under the severe scenario, real GDP is expected to remain well below the level observed at the end of 2019 until the end of 2022
The headline isn’t so much of a surprise since it is the same as what Lagarde has already highlighted in her press conference yesterday. This just adds more colour to it. In case you missed Lagarde’s remarks, you can check them out here and here (Q&A).

EUR/CHF threatens a three-year low as some risk aversion creeps in

  
Analysis, Forex
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The euro is soft on all fronts

The euro is the laggard today as the pain trade continues for euro bulls.
EUR/CHF is no exception as the pair threatens the low of the year at 1.0663. We’re just 5 pips from there now and if that breaks, the next big support level is the 2017 low of 1.0632.
The euro is soft on all fronts

More risk aversion is creeping in today as the minutes tick by. Stocks in the US are holding up but Treasury yields are sliding and gold is climbing.

Wall Street hits new record as takeovers help spark rally

  
Analysis, US Market
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Investors gobbled up US stocks to begin the Thanksgiving week, as trade optimism and a flurry of corporate dealmaking pushed all three major indices to new record highs. The S&P 500 surpassed its peak set one week ago, with technology shares leading the way amid renewed hope the US and China can reach a preliminary trade agreement. The benchmark index climbed 0.8 per cent, ending the day near its session high.

The tech-heavy Nasdaq Composite locked up a record closing high of its own, rising 1.3 per cent. Semiconductor groups — seen as a benefactor from warmer trade relations — helped spark gains in the tech sector. The Philadelphia semiconductor index, which tracks 30 companies in the industry, leapt 2.4 per cent, its best performance in a month. The Dow Jones Industrial Average was back above the 28,000 threshold, as it added 0.7 per cent. Investors’ hopes for a thaw in the US-China trade dispute have helped stoke a record run on Wall Street in recent weeks.

The S&P 500 has traded higher in six of the past seven weeks and has gained more than 3 per cent this month. New guidelines from Beijing on strengthening intellectual property safeguards gave Wall Street renewed confidence on Monday that a “phase one” deal could materialise before December 15, when new American tariffs on Chinese goods are due to begin. China’s alleged theft of intellectual property has been a sticking point in negotiations with Washington.

A series of big deals, including LVMH’s planned $16.6bn takeover of Tiffany and Charles Schwab’s $26bn deal to combine with TD Ameritrade, also gave a boost to stocks. The rally followed on the heels of gains around the world. The Europe-wide Stoxx 600 was up 1 per cent.

The Hang Seng surged 1.5 per cent. Some safe-haven assets took a hit amid the shift to equities. Gold fell 0.5 per cent, and the Japanese yen weakened by 0.3 per cent against the US dollar. The dollar index edged fractionally higher. The yield on the 10-year Treasury note fell 1.4 basis points to 1.7603 per cent.

European mid-morning: Currencies remain little changed but big week lies ahead

  
  Analysis
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Major currencies are <0.1% changed against the dollar so far today

EOD 28-10

The pound is arguably the only active mover as cable rose to a high of 1.2859 earlier in the session before settling back to near flat levels currently around 1.2820-30 levels.
Other major currencies are holding in narrow ranges against the dollar with little conviction to break stride so far today.
The risk mood is a bit mixed overall with European equities looking indecisive but bond yields are marked higher amid the fact that a Brexit extension was granted, with the move higher coming after France moved on their stance from last week.
Despite the slower start to currencies this week, fret not because it is going to be a crucial week ahead and here are some of the highlights to look forward to:
Monday, 28 October (still to come)
– UK parliamentary vote on Johnson’s election motion
Wednesday, 30 October
– Australia Q3 CPI data
– France Q3 preliminary GDP data
– US October ADP employment change
– US Q3 advanced GDP data
– Bank of Canada October monetary policy meeting
– FOMC October monetary policy meeting
Thursday, 31 October
– New Zealand October ANZ business confidence
– China October manufacturing, non-manufacturing PMI
– BOJ October monetary policy meeting
– Eurozone October preliminary CPI data
– Eurozone Q3 preliminary GDP data
– Canada August monthly GDP data
– US September PCE deflator data
Friday, 1 November
– China October Caixin manufacturing PMI
– US October non-farm payrolls, labour market report
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