The Summit of the European leaders, does not stop Euro’s Avalanche
· USD Unemployment Claims out at 440K, versus expected 460K and prior 483K
· CHF CPI m/m out at -.01% versus expected -0.4%, and prior -0.2%
· CAD NHPI m/m out at 0.4% versus expected 0.4%, and prior 0.4%
· EUR German Prelim GDP q/q out at versus expected 0.2% versus expected 0.7%
· EUR Flash GDP q/q (1000GMT)
· EUR Industrial Production m/m (1000 GMT)
· USD Core Retails Sales m/m and Retail Sales m/m (1330GMT)
· USD Prelim UoM Consumer Sentiment (1455GMT)
All day yesterday, the 27 leaders of the European Union met to discuss various economic issues concerning the EU block. While the EU Summit’s agenda contained many important issues, such as possible ways the bloc can pull itself out of its current stunted economic growth, as well as ways to reduce the unacceptably high unemployment rate, the financial markets paid strict attention to one particular issue – Greece.
Prior to the meeting, propelled by speculator news that the European ministers would find a way to help Greece battle its financial problems, the Euro pulled up from its 8 month low against the US dollar, rising by 0.37% to hit a high of $1.3785.
After getting off to a late start, due to heavy snow fall, the European Council President Herman Van Rompuy announced that an agreement had been made regarding Greece’s financial crisis. Although no details were given, Van Rompuy stated that Euro area member states will take determined and co-ordinated action if needed to safeguard stability in the euro area as a whole. The Greek government has not requested any financial support.” However, German Chancellor Merkel, under pressure from domestic opponents who feel that Greece should fix its own mess, forewarned that the deal would come with strings attached – “Greece won’t be left alone but there are rules and these rules must be adhered to. On this basis we will agree on a statement.” Despite hope that today’s summit would appease the financial markets and restore confidence in the Euro, following the announcement, the Euro fell to a low of $1.37061, thereby causing the currency to rescind on its early morning gains.
This morning Germany released its quarterly prelim GDP – came out at 0.0% versus an expectations of an increase of 0.2%, a prior increase of 0.7%. The German economy probably stagnated in the fourth quarter, the country’s Federal Statistics Office said, capping the worst year for Europe’s largest economy since World War II. EUR/USD Three hours after the release of the German GDP, the Eurostat will release the GDP for the entire European Union. While this report tends to have a moderate impact as both Germany and France which account for about half of the Eurozone’s economy already released their GDP, none the less the Flash GDP, is predicting an increase of 0.4%. Simultaneously, the same European commission will release the EU monthly Industrial Production- while last month, EU production increased by 1.0%, this month the rise is predicted to be less extensive at 0.3%
Yesterday, the US department of labor released the weekly unemployment claims, showing that fewer Americans than anticipated filed claims for unemployment insurance last week. The report stated that the initial jobless applications declined 43,000 from its previous level of 483,000 to 440,000, for the week ending Feb 6th. According to representatives from the Labor department, the drop in applications represents the end of an ‘administrative backlog’ that built up when government offices were closed during the year-end holidays, the current figures signal a return to a more “normal” level of claims. Later today, the US will consecutively announce three important reports: the January Core Retail sales, the January Retail sales as well as the Prelim UoM Consumer Sentiment. With all three indicators, predicted to come in with better numbers than their previous report, we can expect that the USD will again finish off this week on a strong note.
Housing Prices in Canada rose for the sixth straight month in December, as market conditions continued to improve and interest rates stayed at historically low level. However, despite 0.4%, as expected, from November last year, housing prices still remain down 0.9% compared to December 2008. Yesterday, the USD/CAD pair fell as much as 0.676%% from its open, hitting a new weekly low of 1.0555. For the past two weeks, the CAD closed the week on a bearish note against its American counterpart. If the U.S retail sales and prelim consumer sentiment reports do not meet their expectations, the USD/CAD could very well reverse its bullish trend, pushing the Loonie to regain some of its prior week losses.
N.B there is a Bank Holiday in the U.S on Monday.
Written by Finexo.com