Euro (€) Currency Thread

jyonda

inspector_monkfish wrote: »

very bad Industrial production figures just came out of EuroZone at 10.00am

month on month -2.6%, compared with -1.6% last month (estimation was only -2.1%)

year on year is now -12% (estimation was -8.9%)

watch it have absoultely no effect on the Euro whatsoever !!;)
cos everything is rosey in the Euro Garden isn't it !!!:cool:

Funny. I was thinking exactly the same thing about the pound last week when the BOE base rate went down, ECB stayed put and the rate went nowhere.

inspector_monkfish

currently off the lows and trading at 1.1090

inspector_monkfish

EUR/GBP: Extends South after Unexpected US Retail Sales Rise

[14:05 EUR/GBP: Extends South after Unexpected US Retail Sales Rise] London, February 12. The EUR/GBP retreat from a European morning 8-day high two pips shy of 0.9075 (1.1019) has extended to lows within a tenth-of-a-penny of 0.9000 (1.1111) since the 13:30GMT disclosure that US retail sales rose by 1.0% last month. The unexpectedly positive number--a fall of 0.8% was forecast, is good for risk appetite and the pound.

0.8990 (1.1123) (today"s Asian session top) and 0.8960 (1.1161) (today"s Asian session base) are sub-figure support points.

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that means going north when u look at it as gbp/eur rather than eur/gbp !!

inspector_monkfish

Not so rosey in the EuroLand Garden......

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Euro-Zone Dec Indus Output Slump Signals Dire 4Q GDP

LONDON (Dow Jones)--Industrial production in the 15 countries that use the euro slumped in December by the largest amount since records began, adding to evidence that the euro-zone economy contracted year-on-year in the fourth quarter of 2008 for the first time on record.

According to figures released Thursday by the European Union's statistics
agency Eurostat, industrial production fell by 2.6% from November, and by 12.0% from December 2007, with both the monthly and annual figures the lowest since records began in January 1990.

The decline was larger than expected. Economists surveyed by Dow Jones
Newswires last week had estimated factory output fell by 2.5% on the month and by 9.9% on the year.

Eurostat revised down its production estimates for November to show a 2.2% fall on the month and an 8.4% decline on the year. Eurostat originally estimated that industrial production declined 1.6% on the month and by 7.7% in annual terms in November.

Industrial production represents 20% of gross domestic product in the euro
zone so the steep November revisions coupled with the woeful December slump suggest that the quarterly decline expected when GDP data are published Friday could be even lower than economists forecast last week.

"The gloomy industrial production figures for December complete the picture of the euro zone economy taking a sharp nosedive by the end of last year and are a strong reminder that there are downside risks to the consensus forecast of a 1.3% quarterly decline in 4Q 2008 GDP," said ING Financial Markets economist Martin van Vliet.

The decline in industrial output was spread across all sectors in December,
with the production of intermediate goods such as raw materials falling most sharply for the fourth straight month and to the lowest level since records began. Production of intermediate goods fell by 5.7% on the month in December and by 20.3% on the year, again the monthly and annual numbers were record lows.

Production of durable consumer goods was also weak as it declined 2.8% on the month in December and by 14.5% on the year.
Declines in industrial output were also significant in all of the euro zone's
leading economies, with production in Germany slumping 4.9% from November, by 2.5% in Italy and by 1.8% on the month in France.

The sharp fall in industrial output is yet further evidence that the economic
recession in the euro zone is deepening and suggests that GDP for the euro area will decline on the year for the first time on record.
In the 27 countries of the European Union, output fell 2.3% on the month and 11.5% on the year, Eurostat said.

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currently trading at 1.1150 (0.8969)

inspector_monkfish

Got some GDP figures coming out of Germany, Italy and EuroZone tommorow morning

Also French non-farm payrolls


no GBP figures

harryhound

inspector_monkfish wrote: »

EUR/GBP: Extends South after Unexpected US Retail Sales Rise


0.8990 (1.1123) (today"s Asian session top) and 0.8960 (1.1161) (today"s Asian session base) are sub-figure support points.

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that means going north when u look at it as gbp/eur rather than eur/gbp !!

Have you noticed that all those reserves in Asia look at the exchange rate and say "how much does it cost in this funny money to buy one real Euro?"

dealsearcher

harryhound wrote: »

Have you noticed that all those reserves in Asia look at the exchange rate and say "how much does it cost in this funny money to buy one real Euro?"

It's the economy .....

Sterling is a well respected currency in Asia and not looked on as 'funny money'. It's all down to the economy. However the euro economy has also had very bad news recently - but that doesn't seem to effect the euro. The euro is being looked at by some as a safe haven currency but it is still struggling a bit with that title.

inspector_monkfish

currently in a nice little rally up from 1.1111 at 7.00am, to 1.1180 right now

inspector_monkfish

Found this interesting article.....

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(GBP) Would a QE environment be bad for GBP?

(GBP) Judging by BoE governor King's unprecedented decision to more or less
pre-announce the MPC's future monetary policy plan well in advance of the next meeting, i.e. further monetary easing and a likely move to formal quantitative easing (QE) to expand money supply, it seems this is a tacit admission of grave concerns that the UK transmission mechanism is more than impaired, with the economy arguably not too far away from a liquidity trap situation. But the impact on GBP of formal QE implementation in theory has to be negative in the first instance. However as there emerge signs that QE is working and having the desired effect, the currency should recover on a sustained basis, the more so if the ECB does not adopt QE.

The BoE is unlikely to want to take the Bank Rate all the way down to zero, for technical reasons, and so as not to completely wreck the monetary transmission mechanism. Indeed in its Feb Inflation Report BoE suggests that if the Bank Rate falls far enough to push average deposit rates to zero, any further reduction in lending rates could lead to a narrowing of the spread that banks maintain between deposit rates and lending rates to cover the cost of providing banking services, plus a profit margin. The BoE argues that a combination of lower spreads and lower pass-through of interest rate cuts is eroding the strength of the monetary policy multiplier, since lower spreads would reduce banks' earnings and could possibly erode their capital, thereby impairing their ability to lend.

The UK is not in liquidity trap situation in the strict sense yet, but it's
moving in that direction, and the BoE is probably wary of such an eventuality. Since the UK is not actually in a deflationary situation, although there are risks, the BoE is unlikely to take the Bank Rate all the way down to zero, although it could take it close. After all, expanding the monetary base itself through QE, via the beefing up of the level of banks' reserves balances at the BoE (as it purchases private & public sector assets), would place downward pressure on nominal interest rates anyway (already the GBP o/n rate has been trading at 0.75% on the bid side for a few days now). So even though we are likely to see a 0.5% Bank Rate in Mar, there is little to suggest that it won't go further down beyond that to a 0.25% floor, later.

Ceteris paribus, in theory the outcome of a move to formal QE should be a
m/t depreciation of GBP TWI initially, as this is to be expected from an
expansion of the money supply. However much would depend on how soon the ECB in particular moves to formally adopt QE as a monetary policy instrument. If the ECB implements QE soon, then any m/t downside on GBP will likely be short-lived. However if it implements much later (or not at all), GBP could stay vulnerable, initially. But further out, if the markets take the view that BoE policy stimulus is bearing fruit, we should expect to see EURGBP head much lower, especially if the ECB is viewed as lagging very much behind the curve, and jeopardising any recovery of the Eurozone from recession. The impact on GBP vs USD from QE in the UK should be limited though since the US Fed is already implementing credit easing, and could even adopt a more formal QE in due course.

And if GBP should depreciate as a consequence of QE, the BoE would probably not be too perturbed by such a development, since it would a) assist in then rebalancing of UK growth away from domestic consumption and more towards net exports and investment over the l/t and, b) help to lift the CPI projection at the 2yr horizon to above the sub-1% rate currently forecast by the BoE.

inspector_monkfish

iNTERESTING ARTICLE IN THE dAILY tELEGRAPH TODAY....

http://www.telegraph.co.uk/finance/economics/4603903/European-finance-ministers-to-attack-Alistair-Darling-over-sterlings-slide.html