The European Union’s statistics office data showed last week, that euro zone’s trade surplus with the rest of the world jumped year-on-year in July as exports surged 7% while imports increased by only 1% because of much cheaper imported energy.
Inflation in the euro zone fell to 0.1% in August, revised data showed last week, in a sign that a dangerous spell of falling prices could be returning to Europe.
The euro zone suffered four months of deflation earlier this year and Fears of longer-term deflation persuaded the European Central Bank (ECB) to launch in March a huge monetary stimulus programme, to get inflation closer to its 2% target.
Last week in a closely watched news, the US Federal Reserve’s (Fed) decided not to raise short-term interest rates off record lows urging fresh concerns over the state of the global economy.
Since the start of the year the currency fell more than 5.0% and is in a bullish phase since the start of September, trading above the 10-week moving average. Last week the EURUSD went back and forward without any clear direction with a narrow range, closing in the red near the open of the week, creating a doji pattern. The stochastic is showing a slight bullish momentum and is trying to cross above the 50 mid line.
Expecting an upward move to the top of the trading channel at 1.1871 on a break above the weekly resistance at 1.1534 (scenario 1) or a bounce from the bottom of the trading channel at 1.1052 could push the currency up to a weekly resistance at 1.1534 (scenario 2).
Greece refuses to accept the hard-line taken by the IMF, which requires long-term solutions rather than short-term measures. The lenders proposed a primary surplus (government revenues minus expenses, excluding interest on the public debt) of 3.5% of GDP by 2018, which was accepted by Greece although the market doubt put into effect. Creditors proposed cuts in reforms in the amount of 1.8 billion euros in 2016 and 2017, to which the Greek government countered with a cut of 1.9 billion euros only in 2016.
Greece has one of the lowest VAT rates in the European Union. Lenders want a standard VAT of 23%, with few exceptions, while Greece wants a structure with three levels: 6%, 13% and 23%. The Greek newspaper Ekathimerini advanced that the EU and the IMF have proposed an increase in VAT on tourist accommodation from 6.5% to 23% and an increase in VAT on the restaurants from 13% to 23%, to be introduced on the 1st of July, intensifying fears about the adverse impact on tourism.
Tuesday, June 30: Is the deadline to comply with all payments to the IMF of around 1.54 billion euros. If Greece fails to pay, Christine Lagarde, head of the IMF, said that refusing the possibility of a grace period. In addition, Greece needs to pay 1.5 billion euros in salaries and reforms by the end of June.
Wednesday, July 1: ECB decision on the Emergency Liquidity Assistance (ELA), which can be crucial in this process because of the lack of liquidity of Greek banks.
Monday, July 20: Payment to the ECB of € 700 million in interest and EUR 3.5 billion in reimbursed capital.
The US dollar fell against the euro on yesterday session after a spike higher in German Bund yields overshadowed a similar rise in US Treasury yields and generated demand for the European currencies.
The European Central Bank (ECB) 1 trillion-euro stimulus program had driven European rates lower, with German 10-year Bund yields threatening to slip into negative territory as recently as last month after hitting a record low of 0.05% on April 17.
Today on the economic agenda we have the German preliminary Gross Domestic Product (GDP) for the 1st quarter that is estimated to fall from 0.7% to 0.5% and from Eurozone the preliminary Gross Domestic Product (GDP) for the 1st quarter where is estimated to rise from 0.9% to 1.1% showing a rising trend that has a positive effect on the EUR.
On yesterday session EURUSD rose and close in the green in near the high of the day, above the 10-day moving average. The currency is still in a recovery phase and stochastic is showing a slight bearish to neutral momentum but still above the 50 mid line.
Expecting an upward move to year high at 1.1459 on a break above previous day high at 1.1278 (scenario 1) or a break below the daily support at 1.1097 could drive the pair down to a key level at 1.0900.
New data showed that euro zone industrial production rose 0.2% in November, in line with expectations, but factory output was down 0.4% on a year-over-year basis. Also on the table is the speculation that the ECB will announce a bigger program of bond-buying or so-called quantitative easing (QE), at its first policy meeting of the year on the 22 of January.
Yesterday the USD was hammered after disappointing US Retail Sales number in December, Retail sales ended the year on a much weaker note than markets were expecting, dropping a notable 0.9% after a downwardly revised increase of 0.4% in November.
EURUSD fell during yesterday session making fresh lows at 1.1726 and close slightly in the green near the open of the day creating a long-legged doji. Stochastic is showing an oversold market setting higher lows and price is making lower lows, signs that the downside may begin to get exhausted. We might see the pair in a choppy sideways action between now and ECB monetary policy meeting on the 22 of January.
Expecting upward move to a daily resistance at 1.20 on a break above previous day high at 1.1846 (scenario 1).
US stock indexes closed well in the green yesterday, due to the meeting minutes from the Federal Open Market Committee (FOMC) and signs of additional stimulus measures from European Central Bank (ECB).
Today on the economic calendar we have from the U.S we have the nonfarm payrolls that expected to fall from 321K to 240K and a slight drop in the unemployment rate to 5.7%. The shocker would be if that unemployment rate fell even lower than 5.7%, highlighting an improving labor market.
Usa500 rallied in early trading breaking above the 10 and the 50 day moving averages and closing near the high of the day. The Index made a wide range day but on low volume and the stochastic is starting to show some bullish momentum.
Expecting upward move to a daily resistance at 2,088.50 on a break above previous day high at 2,058.00 (scenario 1).
Usa500 is a CFD written over S&P500 futures.
New data showed that the euro zone’s inflation rate fell into negative territory in December for the first time since September 2009. The figures add more pressure on the European Central Bank (ECB) to boost more stimulus into the economy.
Yesterday the US labor market beat estimates adding 241K jobs in December and the revisions to previous months were net 14K positive. The continued improvement in the labor market should keep the Fed on track to deliver the first-rate hike in June 2015.
EURUSD fell during yesterday session making fresh lows at 1.1801 and close in the red. Stochastic in showing an oversold market but even with the pair well into oversold territory, we should not fight the strong downward trend. We might see the pair in a choppy sideways action between now and nonfarm payroll numbers on Friday.
Expecting downward move to a psychological level at 1.17 on a break below previous day low at 1.18 (scenario 1).
The US economy added 321K jobs in November and the revisions to previous months were net 44K positive. The continued improvement in the labour market should keep the Fed on track to deliver the first-rate hike in June 2015 and this is likely to be reflected in the tone of the FOMC statement released on 17 December.
ECB, president Mario Draghi maintained the economic policy unchanged, with rates at record lows, delaying the decision on QE to the first quarter of 2015 by indicating that the ECB needs more time to assess the impact of latest measures.
EURUSD fell during Friday’s session making fresh lows at 1.2270 but found enough support at 1.2294 to hold the price and closed near the low of the day.
Expecting downward move to a Fibonacci extension at 1.2183 on a break below Friday’s low at 1.2270 (scenario 1) or a break above the key level at 1.2306 could push the pair up to 1.2389 (scenario 2).