Tag Archives: Euro

Dollar hits low note while euro shines; storms stoke worry in U.S.

Dollar hits low note while euro shines; storms stoke worry in U.S.

By Hilary Russ

NEW YORK (Reuters) – Reduced expectations for another U.S. Federal Reserve interest rate hike this year helped drive down the dollar to its lowest in more than 2-1/2 years on Friday and kept gold near a one-year high.

The euro hit multi-year peaks in the wake of a European Central Bank meeting, while U.S. crude oil prices tanked more than 3 percent as powerful Hurricane Irma roared toward Florida.

Stubbornly weak inflation continues to surprise Fed policymakers. In a speech on Thursday, New York Fed President William Dudley did not repeat an assertion from three weeks ago that he expects to raise rates once more this year.

Also dampening the dollar and lowering the chances of another rate hike was an agreement in Congress to push U.S. debt ceiling talks three months down the road to December, coinciding with the Fed’s policy meeting.

Against a basket of other major currencies, the dollar index <.DXY> was down 0.38 percent after touching a low of 91.011, its weakest since January 2015.

The safe-haven Japanese yen <JPY=> also strengthened 0.61 percent versus the greenback at 107.80 per dollar, and the euro <EUR=> rose 0.12 percent to $1.2036.

The euro’s rally built on ECB President Mario Draghi’s suggestion that it may begin tapering its massive stimulus program this fall.

Draghi referred several times Thursday to the euro’s strength and said it was the main reason for a cut in the bank’s 2018-19 inflation forecasts. He also indicated any winding down of its massive stimulus program was likely to be slow.

Those comments did little to deter euro bulls, however, and a Reuters report that central bank officials were in broad agreement that their next step would be to reduce their bond purchases also supported the currency.

The ECB “left the mystery out there” with regard to tapering, said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York. “It creates a feeding frenzy, and the momentum that was there (in the euro) gets accelerated.”

Oil prices fell sharply on worries that energy demand would be hit by Irma, one of the most powerful storms to near the United States in a century, as it barreled toward Florida and the U.S. Southeast.

Irma is the second major storm to threaten the United States in two weeks after Hurricane Harvey shut a quarter of U.S. refining capacity and 8 percent of U.S. oil production.

“Hurricanes can have a lasting effect on refinery and industry demand,” said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.

U.S. crude <CLcv1> fell 3.12 percent to $47.56 per barrel and Brent <LCOcv1> was last at $53.76, down 1.34 percent.

Economists have said Harvey could weigh on U.S. economic growth in the third quarter.

Spot gold <XAU=> was down 0.2 percent to $1,346.52 an ounceafter hitting $1,357.54, its highest since August 2016. It was up 1.7 percent this week, notching a third consecutive weekly gain.

U.S. shares were mixed, with the S&P ending slightly lower as investors braced for Irma and fretted that Pyongyang could launch another missile test on Saturday, North Korea’s founding day, keeping risk appetite in check going into the weekend.

The Dow Jones Industrial Average <.DJI> rose 13.01 points, or 0.06 percent, to end at 21,797.79, the S&P 500 <.SPX> lost 3.67 points, or 0.15 percent, to 2,461.43 and the Nasdaq Composite <.IXIC> dropped 37.68 points, or 0.59 percent, to 6,360.19.

Stocks elsewhere were slightly higher.

The pan-European FTSEurofirst 300 index <.FTEU3> rose 0.17 percent and MSCI’s gauge of stocks across the globe <.MIWD00000PUS> edged up 0.01 percent.

The U.S. 10-year Treasury yield fell to a 10-month low of 2.016 percent but then rose, with the benchmark notes last up 2/32 in price to yield 2.0559 percent.

(Additional reporting by Sam Forgione, Gertrude Chavez-Dreyfuss, Julia Simon and Lewis Krauskopf and Caroline Valetkevitch in New York; Editing by Nick Zieminski and James Dalgleish)

France’s Victorious Macron reminded of huge and immediate challenges

Outgoing French President Francois Hollande (R) reaches out to touch President-elect Emmanuel Macron, as they attend a ceremony to mark the end of World War II at the Tomb of the Unknown Soldier at the Arc de Triomphe in Paris, France,

By Michel Rose and John Irish

PARIS (Reuters) – Emmanuel Macron was confronted on Monday with pressing reminders of the challenges facing him as France’s next president, even as allies and some former rivals signaled their willingness to work closely with him.

The centrist’s victory over far-rightist Marine Le Pen in Sunday’s election came as a huge relief to European Union allies who had feared another populist upheaval to follow Britain’s vote to quit the EU and Donald Trump’s election as U.S. president.

“He carries the hopes of millions of French people, and of many people in Germany and the whole of Europe,” German Chancellor Angela Merkel told a news conference in Berlin.

“He ran a courageous pro-European campaign, stands for openness to the world and is committed decisively to a social market economy,” the EU’s most powerful leader added, congratulating Macron on his “spectacular” election success.

But even while pledging to help France tackle unemployment, she rejected suggestions Germany should do more to support Europe’s economy by importing more from its partners to bring down its big trade surplus.

European Commission President Jean-Claude Juncker put it bluntly: “With France, we have a particular problem … The French spend too much money and they spend too much in the wrong places. This will not work over time,” Juncker said in Berlin.

The euro fell from six-month highs against the dollar on confirmation of Macron’s widely expected victory by a margin of 66 percent to 34 percent, as investors took profit on a roughly 3 percent gain for the currency since he won the first round two weeks ago.

France’s economic malaise, especially high unemployment, had undermined the popularity of outgoing Socialist President Francois Hollande to the point where he decided not even to run as a candidate.

“This year, I wanted Emmanuel Macron to be here with me so that a torch could be passed on,” said Hollande, who appeared with Macron at the Tomb of the Unknown Soldier at Paris’ Arc de Triomphe to commemorate Victory in Europe Day and the surrender of Nazi forces on May 8, 1945 at the end of World War Two.

Elsewhere in Paris, hundreds of people, led by the powerful CGT trade union, marched in protest against Macron’s planned labor reforms.

PARLIAMENTARY MAJORITY

On assuming office next Sunday as France’s youngest leader since Napoleon, the 39-year-old faces the immediate challenge of securing a majority in next month’s parliamentary election in order to have a realistic chance of implementing his plans for lower state spending, higher investment and reform of the tax, labor and pension systems.

With the two mainstream parties – the conservative Republicans and the left-wing Socialists – both failing to reach the presidential runoff, his chances of winning a majority that supports his election pledges will depend on him widening his centrist base.

The Socialists are torn between the radical left of their defeated candidate Benoit Hamon and the more centrist, pro-business branch led by former premier Manuel Valls.

On Monday, key members of the centrist arm of The Republicans appeared ready to work with Macron despite the party hierarchy calling for unity to oppose the new president and calling those that were wavering “traitors”.

“I can work in a government majority,” said Bruno Le Maire, a senior Republicans party official, who had been an aide of presidential candidate Francois Fillon.

“The situation is too serious for sectarianism and to be partisan.”

Le Pen, 48, defiantly claimed the mantle of France’s main opposition in calling on “all patriots to join us” in constituting a “new political force”.

Her tally was almost double the score that her father Jean-Marie, the last far-right candidate to make the presidential runoff, achieved in 2002, when he was trounced by the conservative Jacques Chirac.

(Additional reporting by Ingrid Melander, Andrew Callus, Bate Felix, Adrian Croft, Leigh Thomas, Tim Hepher, Gus Trompiz; Writing by Richard Balmforth and John Irish; Editing by Mark Trevelyan and Ralph Boulton)

Dollar steadies as pre-Fed nerves dominate

Bank notes of Euro, Hong Kong dollar, U.S. dollar, Japanese yen, GB pound and Chinese yuan are seen in this picture

y Patrick Graham

LONDON (Reuters) – The dollar steadied against the yen and euro on Tuesday after its weakest day in a week, with markets still uneasy that a Federal Reserve meeting ending on Wednesday may provoke more investors to cash in the greenback’s recent gains.

Barclays was the latest major bank to cast some doubt on a dollar rally extending into a first quarter set to be dominated by the first policy initiatives from the Trump administration.

While investors have bet on the new president taking steps to bolster growth that will push inflation higher, there are also concerns that he may spark protectionism globally, driving cash into traditional safe havens like the yen.

A rise in Fed interest rates on Wednesday, a big reason for the dollar index’s 7 percent rise since September, looks fully priced in and there are also doubts over whether the U.S. central bank will want to send a strong signal that more tightening is to follow.

“We think the meeting may be a catalyst for people to take some profit on long dollar positions,” Barclays analyst Hamish Pepper said.

“The dollar tends not to perform particularly well in December. If you put that together with a well priced Fed meeting plus already long positioning, it is the right set-up for a pullback.”

The yen strengthened to less than 115 yen per dollar in Asian trade before settling at 115.34, down 0.2 percent on the day but almost a full yen stronger than 24 hours previously.

It has borne the brunt of the dollar’s rally in the past month, down 13 percent since early October. But some traders and analysts have begun to wonder if the Japanese currency might benefit next year if global political risks grow.

Barclays forecasts the dollar weakening to 100 yen in a year’s time.

The euro was little changed at $1.0629 having gained 0.7 percent on Monday as German bund yields rose amid signs Italy will bail out Italian bank Monte dei Paschi di Siena if need be.

Sterling inched higher helped by higher than expected inflation for November and comments from finance minister Philip Hammond backing a transition period to smooth the process of leaving the European Union.

“Rates markets are discounting close to five 25 basis point Fed rate hikes by the end of 2018,” analysts from BNP Paribas said in a note to clients.

“With the Fed likely to be cautious in its forward-looking language on Wednesday, those positioned long dollars heading into the meeting may be concluding that risk-reward is not attractive for staying in positions into the event risk.”

(Editing by Robin Pomeroy)

U.S. Dollar Hits 17 Month Low

A U.S. one-hundred dollar bill (C) and Japanese 10,000 yen notes are spread in Tokyo

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar hit a 17-month low against the safe-haven yen on Tuesday on investor concerns about global economic growth, while the euro was set to post its first daily loss against the dollar in more than a week on soft European economic data.

The dollar extended its losses against the yen to 8.2 percent for the year, with a downturn in stocks and commodity prices fueling the latest rally in the Japanese currency. The dollar hit 110.27 yen, its lowest level since late October 2014.

The dollar was last down 0.71 percent against the yen &lt;JPY=&gt; at 110.52 yen in late morning U.S. trading. The dollar had weakened against the yen in recent sessions in the aftermath of Federal Reserve Chair Janet Yellen’s dovish comments last week.

“The market is maybe giving up a little bit on the global growth story,” said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Limited in New York.

Traders cited huge options barriers at 110 yen, however, that could slow the greenback’s drop in the short term.

Investors were cautious about driving the yen much higher given the risk of intervention by Tokyo, with many wondering how much appreciation Japanese officials will tolerate before they are forced to act and weaken the currency.

The euro &lt;EUR=&gt; hit a session low against the dollar at $1.1337, down from a 5-1/2 month peak of $1.1437 touched on Friday.

German factory orders and a subdued start to the euro zone’s business activity in the first quarter weighed on the euro, while the currency briefly touched its session low against the dollar after Institute for Supply Management data showed a stronger-than-expected gain in the U.S. non-manufacturing sector in March.

“The concern is that going forward we will continue to see a loss of momentum in the euro zone,” said Sireen Harajli, currency strategist at Mizuho Corporate Bank in New York.

The Australian dollar hit a one-week low against the greenback of $0.7511 as oil prices fell for a third straight session. Lower commodity prices tend to reduce inflationary pressures, causing a worry for policymakers in the developed world, who want to head off the threat of deflation.

The dollar index &lt;.DXY&gt;, which measures the greenback against a basket of six major currencies, was last up 0.28 percent at 94.774.

(Reporting by Sam Forgione; Additional reporting by Anirban Nag in London; Editing by Dan Grebler)

Dollar turns lower against euro, yen on doubts over rally’s momentum

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar lost ground against the yen and was mostly flat against the euro on Wednesday, reversing earlier gains after traders took profits on skepticism that central bank policy in the United States and elsewhere would continue to diverge.

The dollar fell to a session low of 113.23 yen after hitting a more than two-week high against the Japanese currency of 114.55 yen early in the U.S. trading session. The euro was last up slightly against the dollar at $1.0866 after hitting a more than one-month low of $1.0826 earlier.

Early in the U.S. session, data showing stronger-than-expected growth in U.S. private payrolls in February added to a recent pile of reassuring U.S. economic data and boosted expectations that the Federal Reserve would hike interest rates at least once this year.

That optimism cooled, partly on doubts that uniformly strong U.S. economic data would continue and that the European Central Bank would announce a greater stimulus package and weaken the euro at the central bank’s meeting on March 10.

“People are taking a bit of a profit after a strong ride,” said Sebastien Galy, currency strategist at Deutsche Bank in New York, in reference to the dollar’s recent gains. “Everyone knows the dollar, for good reasons, is too expensive.”

The ADP National Employment Report showed U.S. private employers added 214,000 jobs in February. That was above economists’ expectations for a gain of 190,000, according to a Reuters poll.

Uncertainty remained over the impact of low oil prices on Fed policy and China’s economic growth, leading traders to take profits in the dollar’s gains, said Sireen Harajli, currency strategist at Mizuho Bank Ltd in New York.

Harajli said uncertainty ahead of Friday’s U.S. non-farm payrolls report for February may have contributed to the reversal in the dollar’s rally. Economists polled by Reuters expect U.S. employers to have added 190,000 jobs last month.

The U.S. dollar index, which hit a roughly one-month high of 98.582 earlier, was last down 0.17 percent at 98.176 <.DXY>. The dollar was last down 0.53 percent against the yen at 113.38 yen <JPY=>.

The dollar was last down 0.07 percent against the Swiss franc at 0.9962 franc <CHF=>.

(Reporting by Sam Forgione; Editing by Lisa Von Ahn)

Greece PM Fighting With Own Parliament Over Bailout Deal

While much of the world celebrated a bailout deal that would keep Greece from entering into bankruptcy and a forced exit from the Euro, the country’s Prime Minister found himself facing a hostile and combative Parliament.

Greece’s PM Alexis Tsipras spent all day Tuesday in contentious meetings with his own party’s members of parliament and the conflict was so severe it was possible he would need to form a new national unity government to get the bailout passed for the nation.

The deal is critical for the nation as they missed a second debt repayment to the International Monetary Fund (IMF) putting them further behind in their debt load.

Over 2 million euro are owned to the IMF by Greece as of Monday.

The nation’s banks have been closed since June 29th and without the deal there is no indication when they could re-open.  Heavy restrictions on ATM transactions remain in place.

The IMF surprised many observers today by releasing a report on the bailout agreement stating the country needs “massively more” debt relief than admitted by eurozone officials.

“The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date – and what has been proposed by the ESM,” the IMF stated.

Economic Worries Drive Pound Lower

The British pound has fallen against both the U.S. dollar and the Euro on fears that the economy is weaker than previously stated by analysts.

The pound fell to a seven month low against the dollar and a 15 month low against the Euro. A Bank of England policymaker is being pointed to as a source for the drop after stating the pound needed to weaken further to improve the economy. Continue reading →

Eurozone Unemployment Hits Another High

Unemployment in the Eurozone has risen to 18.2 million after releasing economic data for August. The rate of unemployment remained the same after the rate for July was revised upward at 11.4%, however there was an increase of 34,000 out of work in the month.

The highest unemployment rate for an individual nation was Spain where one out of four eligible workers are unemployed. Austria had a rate of 4.5%. The rate in Germany, the Eurozone’s most stable economy, was 5.5%. Continue reading →

Eurozone Economy Continues To Shrink

The economy of the Eurozone shrank .2% in the second quarter of the year compared to the previous quarter. The economies of the full 27 European Union member nations also fell .2% during the second quarter.

The Eurozone and the EU are technically not in a recession due to the definition of recession requiring two straight quarters of negative growth and the first quarter of the year had zero growth. However, economists are pessimistic about the rest of the year and believe a recession is likely. Continue reading →