• Tag Archives Euro
  • Gold Price Jumps in Dollars as ‘Low-Rate Yellen’ Gets Trump’s Backing

    Gold price gains continued for Dollar investors on Thursday but held flat for other traders as the US currency touched its lowest Euro value since January 2015 following yesterday’s “no change” decision from the Federal Reserve.
    “The actual path of the federal funds rate will depend on the economic outlook as informed by incoming data,” said the Fed’s July statement, seemingly delaying a move to start reducingits $4.6 trillion holdings of QE-bought Treasury and mortgage-backed bonds.
    Asian stock markets rose – as did most commodities and major government bond prices – but European equities then slipped as the Dollar bounced from its new 30-month lows versus the 19-nation single currency.
    Gold priced in Dollars today set its highest London benchmarking since 14 June at $1262 per ounce.
    But priced in Euros, gold fixed at only a 3-session high. The UK gold price in Pounds per ounce reached only a 2-session high.
    Thursday morning’s Dollar price stood 2.0% above the 2017 average to date.

    This post was published at FinancialSense on 07/27/2017.


  • Five Years Ago Today…

    ime flies when you are printing money.
    As Citi’s FX desk is kind enough to remind us, it was five years ago today that Donald Trump was a businessman and TV personality, and ECB President Mario Draghi vowed that:
    ‘The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.’
    He then compared the common currency to an insect:
    ‘The euro is like a bumblebee. This is a mystery of nature because it shouldn’t fly but instead it does. So the euro was a bumblebee that flew very well for several years. And now — and I think people ask ‘how come?’– probably there was something in the atmosphere, in the air, that made the bumblebee fly. Now something must have changed in the air, and we know what after the financial crisis.’

    This post was published at Zero Hedge on Jul 26, 2017.


  • IMF Sees U.S. Fading as Global Growth Engine

    The world is leaning less on its biggest economy to sustain the global recovery, according to the International Monetary Fund.
    The fund left its forecast for global growth unchanged in the latest quarterly update to its World Economic Outlook, released Monday in Kuala Lumpur. The world economy will expand 3.5 percent this year, up from 3.2 percent in 2016, and by 3.6 percent next year, the IMF said. The forecasts for this year and next are unchanged from the fund’s projections in April.
    Beneath the headline figures, though, the drivers of the recovery are shifting, with the world relying less than expected on the U.S. and U.K. and more on China, Japan, the euro zone and Canada, according to the Washington-based IMF.
    The dollar fell to its lowest in 14 months last week as investors discounted the ability of President Donald Trump’s administration to deliver on its economic agenda after efforts by the Republican Senate to overhaul health care collapsed.
    ‘U.S. growth projections are lower than in April, primarily reflecting the assumption that fiscal policy will be less expansionary going forward than previously anticipated,’ the IMF said in the latest report.

    This post was published at bloomberg


  • The Breakdown Before the Breakthrough

    Since our last note, the US dollar index has made its way down to the lows of last summer, currently hovering just above the Brexit upside pivot from June 24th, 2016.
    Although asset trends can elicit major technical breaks from oversold conditions (i.e. crash), the more probable outcome from our perspective favors another retracement bounce, before traders can set their sights on breaking through long-term underlying support that’s confined all declines in the dollar index over the past 3 years.
    Maintaining a KISS approach of lower highs and lows that has served traders well this year in the US dollar index, we would look for the highs from early July to contain a prospective bounce. This methodology also applies to the flipside of momentum for potential lows in the euro, yen and gold – with the two latter assets also likely influenced by the short-term respective trends in equities and yields. In this respect, over the near-term the Japanese yen and gold could hold up better than the euro, as we suspect the rally in equities gives back this months gains – largely supporting the uptrend in long-term Treasuries and buttressing safe haven assets like the yen and gold.

    This post was published at GoldSeek on Tuesday, 25 July 2017.


  • European Stocks Fall To 3 Month Lows On “Carmaker Cartel” Fears, Sliding PMIs; US Futures Lower

    In a mixed session, which has seen Asian stocks ex-Japan broadly higher, the European Stoxx 600 index dropped as much as 0.6% after data Markit PMI data signalled euro-area economy grew in July at its slowest pace in six months while carmakers extended declines on continued concern about antitrust collusion in the industry. Germany’s DAX Index was hardest-hit euro-area benchmark, down as much as 0.8%. Autos continued to be the worst-performing sector on the Stoxx Europe 600 after EU and German regulators said they are studying possible collusion among German automakers. Der Spiegel magazine reported on Friday that BMW, Daimler and Volkswagen may have cooperated for decades on technology.
    ***
    Concerns have risen that with the Euro trading near its strongest level in 2 years and appreciating 11% against the USD YTD, it may weigh on exporters’ earnings; 1.20 on the EURUSD is being seen a key barrier beyond which European earnings will suffer. As a result, the euro headed for its first decline in three days as data showed the region’s economy cooling at the start of a week packed with earnings results and a Federal Reserve rate decision. Stocks were dragged down for a second day by carmakers amid a collusion probe.

    This post was published at Zero Hedge on Jul 24, 2017.


  • Last Chance for the Dollar to Rally

    I think we need to focus on what is happening to the dollar. The intermediate cycle is now 63 weeks long. Clearly that isn’t normal. I’ve maintained for several years that the end game was going to play out in the currency markets. There has to be consequences to printing trillions and trillions of currency units , and leaving interest rates at 0 for 8 years. I don’t think the consequences are going to be deflation. I think the end game will be inflation, just like it was in the 70’s, and just like it was in 2007 and 2008.
    It’s taken a while to manifest as other countries have jumped into the game and turned on their printing presses as well, so the collapse in the currency I’ve been looking for has taken quite a while to unfold. The first leg down ended in 2008.
    The dollar rally out of the 2014 3 YCL has fooled everyone into thinking the dollar is strong and the euro is going to collapse. So everyone is now on the wrong side of the market. That’s pretty much how every bear market starts with everyone on the wrong side of the boat.

    This post was published at GoldSeek on Sunday, 23 July 2017.


  • Nobody told the euro that Mario Draghi was dovish

    If Mario Draghi was trying to talk down the euro, it didn’t go so well.
    The European Central Bank president attempted to strike as dovish a stance as was possible given the circumstances in his news conference Thursday. He emphasized the lack of a pickup in underlying inflation, insisted the Governing Council won’t really think about tapering until the fall, and banged away on how the central bank could actually ramp up its quantitative easing program, should conditions deteriorate.
    The performance was seemingly a disappointment to anyone looking for reassurance when the ECB will lay out what it plans to do with its quantitative easing program in 2018. The ECB is committed to continuing it program of 60 billion a month in bond purchases through the end of the year, ‘or beyond.’
    But euro bulls didn’t appear to care. The shared currency EUR/USD, -0.0086% jumped during the news conference and then extended gains, topping $1.16 versus the dollar and trading at its highest level since August 2015.
    The news conference performance was in contrast to a speech in Portugal late last month that got investors primed for a QE wind-down. At that conference, Draghi’s emphasis on how reflationary pressures were replacing deflationary pressures was the trigger.

    This post was published at Market Watch


  • Market Talk- July 21st, 2017

    We did eventually see a mixed close in US with the NASDAQ setting new gains but the late rally failed to convince Asian markets of the rally and having seen ECB unchanged, we saw Asian indices small down. It was a reasonably light session to close the week as main core markets drifted. The Nikkei watched the yen trade better (last seen trading towards the 110 handle) so having a negative effect on stocks resulting in a negative -0.2% close. Shanghai and Hang Seng gave a little back also after the recent consistent positive momentum, which is a fair performance when considering recent currency strength. Top talking points were surrounding the disconnect between the bond and stock markets, but also the weakness in the USD and the strength in gold. The USD has been losing support as we approach an almost 2% decline against the Euro but that is having a significant effect on European stocks.
    As Mario Draghi has kept the currency going the negative effects are being seen on equities, and a resurgence of bond spread tightening. It appears the fixed-income market is being the adult in the room seeing the road clear to continue the carry tightening play. That said, US stocks have held in well as earnings plays its supporting role but we should have a clearer picture next week when we hear from the Federal Reserve. Core markets closed with almost 2% declines which for foreign investors is really starting to hurt even providing for the recent euro rally.

    This post was published at Armstrong Economics on Jul 21, 2017.


  • Euro Surges To 2-Year High In “Bipolar” Draghi Reaction; Futures Flat

    The euro’s surge to an almost two-year high put a cap on the global market rally in Friday’s quiet session, with most major exchanges consolidating after a second strong week of gains. The MSCI Asia-Pacific index declined for first time in ten days while the European Stoxx 600 index was fractionally in the green as were US equity futures ahead of earnings reports from General Electric, Honeywell, Schlumberger and others. Oil gained with Brent flirting with $50, zinc rallied along with most base metals. European stocks are little changed, while Asian stocks decline with Tokyo shares falling for first time in three days.
    Also overnight, AUD traders were caught wrongfooted for the second time in one week after the Aussie fell sharply following an unexpectedly dovish speech from RBA Deputy Governor Debelle, who said there’s no significance in the board’s neutral rate discussion, which earlier this week sent the Aussie surging. “No significance should be read into the fact the neutral rate was discussed at this particular meeting,” Debelle said in text of speech. “Most meetings, the board allocates some time to discussing a policy-relevant issue in more detail, and on this occasion it was the neutral rate.” In addition to the drop in AUDUSD, Australian sovereign yields all dropped 5-7 basis points in bull steepening move; three-year yield drops as much as nine basis points to 2.00% – the steepest decline since March on a closing basis. Kiwi rallied to highest since September 2016 on Finance Minister Joyce comments; yen little changed. S&P futures near unchanged. WTI crude holds near $47; Dalian iron ore falls 0.7%.
    But most of the attention was on the EUR in the aftermath of Thursday’s paradoxical Draghi press conference, which led to a “bipolar” market reaction, seen as dovish by rates while hawkish by FX.

    This post was published at Zero Hedge on Jul 21, 2017.


  • 20/7/17: Euro Area’s Great non-Deleveraging

    A neat data summary for the European ‘real economic debt’ dynamics since 2006:
    ***
    In the nutshell, the Euro area recovery:
    Government debt to GDP ratio is up from the average of 66% in 2006-2007 to 89% in 2016; Corporate debt to GDP ratio is up from the average of 72% in 2006-2007 to 78% in 2016; and Household debt to GDP ratio is down (or rather, statistically flat) from the average of 58.5% in 2006-2007 to 58% in 2016.

    This post was published at True Economics on Thursday, July 20, 2017.


  • World Stock Markets Firmer; ECB Meeting Conclusion Awaited

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    (Kitco News) – Most world stock markets were firmer overnight, continuing to see upside support from generally upbeat corporate earnings reports. U. S. stock indexes hit record highs on Wednesday and are poised to move still higher when the New York day session begins.
    Gold prices are lower in pre-U. S.-session trading today. Some mild profit taking from the shorter-term futures traders is featured after recent good gains in the yellow metal.
    In overnight news, the Bank of Japan at its latest monetary policy meeting Thursday scaled back its inflation expectations to suggest its easy-money policies can remain in place longer.
    The European Central Bank is meeting Thursday. The marketplace is awaiting the ECB’s stance on future monetary policy for the Euro zone. ECB President Mario Draghi’s press conference will be the highlight of the ECB meeting.

    This post was published at Wall Street Examiner by Jim Wyckoff ‘ July 20, 2017.


  • Global Stocks Hit Record High, Set For Longest Winning Streak Since 2015

    In what has been a less exciting session than the previous two, the euro retraced some recent gains as traders grew concerned they may have overestimated the ECB’s hawkish bias ahead of Thursday’s rate decision; in turn the dollar edged higher after the collapse of the GOP healthcare bill sent it to the lowest since September on Tuesday.
    Not even Citi could infuse any excitement in the overnight session, which its called “Purgatorial”:
    Markets are more or less flat so far today as we face a temporary dearth of data and speakers. USD remains weak, but there has been no real excuse to continue selling yet. The ECB and the BoJ are both up tomorrow and any potential moves may be linked to pre-positioning/squaring rather than anything that today may offer us…
    There is little of note this afternoon that could tickle the fancy of even the most excitable FX watcher – We are staring into the abyss… and DoE inventories are staring right back. As oil is flat so far today, that print could provoke a small twitch. Elsewhere, we get US housing starts and Canadian manufacturing shipments…
    In Dante’s inferno, Purgatorio immediately precedes Paradiso. Fingers’ firmly crossed.

    This post was published at Zero Hedge on Jul 19, 2017.


  • Asian Metals Market Update: July-19-2017

    The next two days are very crucial for all metals and energies. Gold, silver, copper and nickel are bullish but need to break key resistances for another wave of rise. If gold, silver, copper and nickel do not break key resistances then there can be a sell off. Zinc and lead are testing key short term support. Either zinc and lead hold those key supports or else there will be a sell off. Crude oil needs to break and trade over $49.00 this week to prevent short sellers from getting the upper hand. Natural gas is bullish but once again like bullion, they need to break key resistances for another wave of rise.
    Central bank currency wars are not over yet. Tomorrow’s European central bank meeting will be relevant only with statement directing at altering the current strengthening trend of the euro.
    Bitcoins – current price $2267.00
    Trend is bullish. Bitcoin can rise to $2370 and $2646 as long as it trades over $2224. Sellers will be there below $2224 to $2044 and $1882. Key support till Friday is at $2044.

    This post was published at GoldSeek on 19 July 2017.


  • Dollar Tumbles, Euro Soars After Obamacare Repeal Dies; China Intervenes To Halt Rout

    Bulletin headline summary from RanSquawk
    The USD-index dropped to 10 month lows amid fading hopes of US reforms after Obamacare repeal effectively died last night. Soft CPI from the UK and NZ weigh on both currencies Looking ahead, highlights include BoE’s Carney and the API Crude report The Dollar Index sank to its lowest level since September, a fresh 10-month low, after two more Republican defections on Monday night doomed the proposed GOP healthcare plan in the Senate. And while Treasuries rose on concerns about inflationary pressures and the viability of the Trump stimulus agenda, S&P futures rebounded gingerly from session lows, and were up 0.01% after posting nominal declines earlier in kneejerk reaction to the Senate news.

    This post was published at Zero Hedge on Jul 18, 2017.


  • How Governments Can Kill Cash

    This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
    The global elites are using negative interest rates to do the same thing as inflation – make your money disappear. One way to avoid negative interest rates is to go to physical cash. In order to prevent that option, the elites have launched a war on cash.
    The war on cash has two main thrusts. The first is to make it difficult to obtain cash in the first place. U. S. banks will report anyone taking more than $3,000 in cash as engaging in a ‘suspicious activity’ using Treasury Form SAR (Suspicious Activity Report).
    The second thrust is to eliminate large-denomination banknotes. The U. S. got rid of its $500 note in 1969, and the $100 note has lost 85% of its purchasing power since then. With a little more inflation, the $100 bill will be reduced to chump change.
    The war on cash is old news, but there are new developments. Last May, the European Central Bank announced that they were discontinuing the production of new 500 euro notes (worth about $575 at current exchange rates). Existing 500 euro notes will still be legal tender, but new ones will not be produced.

    This post was published at Wall Street Examiner on July 17, 2017.


  • Have Bundesbank Agents Infiltrated the Fed?

    Germany’s central bank is the Bundesbank. Prior to the commencement of trading of the euro in January 1999, the Bundesbank conducted Germany’s monetary policy. The Bundesbank has a reputation for pursuing general price-level stability above all else. You might say that the Bundesbank has inflation phobia. The reason for this Bundesbank inflation phobia is the remembrance of the hyperinflation Germany experienced between World Wars I and II. Given the US central bank’s recent actions, it would almost seem that the Fed has developed inflation phobia too.
    Although the US does not have general price-level stability, the rate of change of the consumer price index (CPI), no matter how you slice or dice it, is absolutely low. This is illustrated in Chart 1. Plotted in Chart 1 are the 12-month percentages changes in monthly observations of various CPI measures – the CPI including all of its goods/services items, the CPI excluding its energy goods/services items and the Cleveland Fed’s 16% trimmed-mean CPI. The 16% trimmed-mean CPI eliminates components showing extreme monthly price changes. Eight percent of the weighted components with the highest and lowest one-month price changes are eliminated and the mean is calculated from the remaining components, making the 16% trimmed- mean CPI less volatile than either the CPI or the CPI excluding prices for energy goods/services. In the 12 months ended June 2017, the percentage changes in the CPI with all items, the CPI excluding energy items and the 16% trimmed-mean CPI were 1.6%, 1.6%, and 1.9%, respectively. Moreover, the 12-month percentage change in the CPI, no matter how you measure it, has been trending lower since the first two months of 2017.

    This post was published at FinancialSense on 07/17/2017.


  • “We Are Living In A Different World”: BofA Can’t Explain What Is Going On With Volatility

    With the VIX once again pummeled on Friday and set to open below 10 yet again, here are some statistics from Kyle Beard of Bloomsbury advisory: “The VIX has only traded below 10 41 times since 1993 (intra-day). 21 of those occurrences have taken place since May 1, 2017. When you consider there have been 6,179 trading days since 1993, you realize how incredible this is.”
    ***
    However, it’s not just the VIX: as BofA’s David Woo points out, volatility across financial markets has collapsed in recent months:
    The MOVE index, which measures interest rate volatility across the US yield curve, is hovering just above the 52 level that represents the trough of the index since 1988. Only in 2007 and 2013 was the index lower, and only barely. VIX has again dropped below 10. The only time it was lower since the inception of the index in 1990 was briefly in 1993. 3-month EUR/USD vol is now below 7. Since the inception of the euro, EUR/USD vol was only lower twice, in 2007 and 2014.

    This post was published at Zero Hedge on Jul 17, 2017.


  • How High Can the Euro Go on this Reaction – 116 or 125-128?

    This upcoming seminar in Frankfurt Germany will deal with both the short-term and long-term. This has been the Year from Political Hell, and it will not end until after the German elections. With the ECB finally throwing in the towel admitting (but certainly not publicly) that nearly 10 years of low to negative interest rates has utterly failed to reverse the deflation. Now with the expectation of higher interest rates, the optimism is returning on schedule in Europe as virtually 99% are touting that deflation is over and let the good times roll.
    ***
    Of course, the greatest error with currency is the general public view it as a share price. They assume that the higher the Euro the stronger the economy becomes. Yet historically, the exact opposite is always true because currency is the medium of exchange which sits on the opposite side of the scale with tangible assets. Deflation is when assets decline because the currency rises in purchasing power.

    This post was published at Armstrong Economics on Jul 16, 2017.


  • Europe’s Unsustainable Welfare State

    Angela Merkel used to say that ‘the European Union is about 5% of the world’s population, about 25% of its GDP, and about 50% of global welfare spending’:
    The real data is more concerning.
    The European Union is:
    7.2% of the World Population.
    23.8% of the World’s GDP.
    58% of the World’s Welfare Spending.
    Something has to give.
    The EU average tax burden on workers is 44.9%. The average worker in the EU spends half a year working for the tax man.
    Taxation accounts for 41% of the euro area GDP.
    Ease of doing business remains below the leading economies of the world.
    Bureaucracy is asphyxiating. The EU approves on average 80 directives, 1,200 regulations and 700 decisions per year.
    The main EU economies remain significantly below the leaders in economic freedom.

    This post was published at Ludwig von Mises Institute on 07/14/2017.


  • Spot Gold Jumps as US Retail Sales + Inflation Hit Dollar, Risk of ‘Bar Selling’ on Japan’s 0% JGB Plan

    Spot gold prices jumped near 2-week highs at $1232 per ounce Friday lunchtime in London as weak US retail sales and inflation data saw the Dollar drop hard on the forex market.
    Consumer prices rose 1.6% in July from a year earlier, the Bureau of Labor Statistics said – the weakest inflation since before Donald Trump won the presidential election last November – while retail sales fell for a second month running, also defying analyst forecasts.
    The Euro jumped half-a-cent towards this week’s 2-month highs versus the US currency, while the Japanese Yen jumped to a 2% gain for this week at its strongest level since 3 July.
    The spot gold price outpaced them both, however, rising to a weekly gain for Eurozone and Japanese investors and adding 0.6% from last Friday against the British Pound.
    Major government bond prices jumped having weakened badly since the US Federal Reserve raised Dollar interest rates to a ceiling of 1.25% this time last month.
    That pushed bond yields sharply lower across the board, with 10-year US Treasurys offering its lowest rate so far in July at 2.28%.

    This post was published at FinancialSense on 07/14/2017.