Euro Rises for 3rd Day on Optimism Europe’s Contraction Slowed

The euro also advanced against 13 of the 16 major currencies before a U.S. report that may show retail sales gained for a third month, prompting investors to seek higher- yielding assets. South Korea’s won led Asian currencies higher after the Federal Reserve acknowledged that the worst U.S. recession since the 1930s may be ending, helping shore up demand for riskier assets. “I expect growth in the euro-zone economy will be very high” later this year and that should benefit the euro, said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “I will be surprised if we didn’t see something positive in the second half of this year.” The euro strengthened to $1.4224 as of 11:06 a.m. in Tokyo from $1.4188 yesterday in New York. The 16-nation currency rose to 136.47 yen from 136.32 yen. The yen was at 95.96 per dollar from 96.06. The won rose 0.8 percent to 1,236.60 per dollar.

Morning Forex Overview

The euro rose against the yen and the dollar in Asia Thursday as firm Asian share markets spurred demand for the riskier euro.
Overnight comments by the Federal Reserve also led to a more optimistic economic outlook among traders, nudging them to take more risks and buy the single currency, dealers said. The euro's near-term direction is slightly upward, they added.
Regional share markets were broadly higher. As of 0530 GMT Japan's benchmark Nikkei 225 Stock Average index was up 1.0%, while stock markets in South Korea, India and Australia also gained.
Some Japanese banks sold the dollar for the yen due to redemptions of dollar-denominated bonds, traders said.
The Euro tested USD1.4100 before bouncing hard on USD weakness in the US session, shrugging off the FOMC report to finish above USD1.4200. June Industrial Production fell -0.6% vs. 0.3% forecast. EURJPY had a wild day trading in a 3 yen range on the change in risk appetite. EURGBP remained supported on GBP weakness.
British pound propped up by a weaker US dollar despite bearish sentiment in their country. Bank of England said inflation will stay below its 2 percent target as its economy undergoes a "slow and protracted" recovery. UK Central bank Governor Mervyn King said it is "more likely than not" that inflation will slow below 1 percent this year and unemployment reached a 14-year high. Thus, UK interest rates are expected to remain on hold for a while.
The Australian dollar reversed course Thursday, rallying as risk appetite regained lost ground while long-dated bond futures were sold. Spurring the risk-buying mood in Asia was a relatively optimistic outlook from the U.S. Federal Reserve, which didn't extend it's bond buying program and said the economy's contraction is slowing.
Market expectation
The euro is marginally higher against the dollar, yen and UK pound as short-term Asian investors buy on higher risk tolerance.
EURUSD reported offers placed between USD1.4265/70 able to contain the early GDP react driven rally, with underlying tone remaining firm. Rate currently trades around USD1.4257 after touching fresh intraday highs at USD1.4268 (50% USD1.4448/1.4086). Above USD1.4270 may open a move on toward USD1.4280/85.
For Pound offers seen placed above USD1.6585 through to USD1.6600, a break to open a move on toward USD1.6615/20 ahead of stronger level at USD1.6650. Support now seen placed at USD1.6550, a break below USD1.6540 to open a deeper move back toward USD1.6510/00.
Attention now turns to U.S. retail sales data at 1230 GMT and second-quarter earnings from Wal-Mart Stores Inc. later in the day to gauge whether consumption is recovering in the U.S.
The euro could rise toward JPY138.00 and USD1.4300, if those figures come in better than expected, adding to the positive outlook for the U.S. economy, dealers said.
European stock markets are expected to open higher Thursday, as investors react with optimism to the latest comments from the Federal Reserve about the strength of the U.S. economy, the world's largest.

Germany, France exit recession early

German gross domestic product rose by 0.3 percent in the second quarter, bringing an end to the country's deepest recession since World War Two and boosting hopes of recovery in the broader euro zone. French GDP also grew by 0.3 percent in the second quarter. The consensus in a Reuters poll of economists had predicted a 0.3 percent quarterly contraction in both countries. "The data is very surprising. After four negative quarters France is finally coming out of the red," French Economy Minister Christine Lagarde told RTL radio. Germany suffered a calamitous 3.5 percent contraction in the first quarter of this year to cap four quarters of decline while the French economy shrank by 1.3 percent.

Euro hits 1-week high vs dollar after EZ Q2 GDP

Euro zone gross domestic product contracted only 0.1 percent in April-June against the first three months of the of 2009, when the quarterly fall was 2.5 percent, estimates from the European Union's statistics office Eurostat showed [ID:nLD440556]. The euro EUR rose as high as $1.4281 according to electronic trading platform EBS, its strongest since last Friday. The pair traded around $1.4255 before the announcement.

U.S. Unemployment Claims Increased to 558,000

Featured Advertiser (ForexDistrict) - Seasonally adjusted initial claims were 558,000 in the week ending August 8, recording an increase of 4,000 from the previous week's revised figure of 554,000, a report by the U.S. Department of Labor showed today. The four-week moving average, a better gauge of initial claims, estimated an increase of 8,500 to 565,000. Initial claims were lower than expectations for the second week of August as analysts had expected the number around the 548,000 range. A key component of the report edged lower, albeit remaining at record highs. During the week ending August 1 a decrease of 141,000 was reported with the figure falling near the 6.0 million mark at 6,202,000. The largest increases in initial claims for the week ending August 1 were in Alabama, Washington, Nebraska, Kentucky, and Delaware, while the largest decreases were in California, Michigan, Tennessee, Florida, and Georgia. By Manuel F. Ramirez. Edited by Juan P. Bejarano Related Stories:

Retail Sales in U.S. Unexpectedly Fell as Job Losses Mounted

Sales at U.S. retailers unexpectedly fell in July, the first decline in three months, as concern over jobs and stagnant incomes caused consumers to cut back on other items after taking advantage of the cash-for-clunkers program. The 0.1 percent decrease followed a revised 0.8 percent gain in June that was larger than previously estimated, Commerce Department figures showed today in Washington. Purchases excluding automobiles fell 0.6 percent, also more than anticipated.

New Zealand Q2 retail sales gain, backing low rates

Sales volumes, which strip out price movements, rose 0.4 percent in the April to June period over the previous quarter, seasonally adjusted, with core, ex-auto, sales up 0.2 percent, official data showed on Friday. A Reuters poll forecast no change in sales volumes. The data was seen pointing to the economy starting to emerge from recession that started early last year, but not requiring any change to the central bank's low rate policy. 'It's the sort of thing that leaves the Reserve Bank (of NZ) where it is, reducing the odds of a rate cut,' said Bank of NZ senior economist Craig Ebert.

Morning Forex Overview

The euro and dollar fell against the yen in Asia Friday as weak Chinese stocks and lower U.S. long-term interest rates prompted players to sell those units for the Japanese currency.
Japanese exporters joined in the selling on a regular settlement day, dealers said, while the dollar came under further pressure ahead of the redemption of U.S. Treasurys on August 17.
With the outlook for Chinese share prices remaining grim, the euro and dollar are expected to continue heading southward against the yen, traders said.
Short-term foreign exchange market players have recently grown sensitive to movements in Chinese share markets, amid concerns that weaker-than-expected Chinese growth may drag on a global recovery. A slumping Shanghai Composite index, down 2.4% in early afternoon trade, again triggered a selloff in risk sensitive currencies such as the euro.
Meanwhile, the dollar stood at JPY95.22 compared to JPY95.36 late Thursday in New York. The greenback had fallen against the yen overnight, after U.S. retail sales data marked a 0.1% drop in July, disappointing expectations for a 0.8% rise. Sentiment remained negative in Asia, dealers said.
Euro rose to a one-week high at USD1.4328 against the greenback on Thursday as the euro zone's two biggest economies unexpectedly returned to growth in the second quarter of the year. In Germany, Europe's largest economy, gross domestic product rose surprisingly by 0.3% in the second quarter.
The British pound rebounded even though the UK unemployment rate jumped to 7.8 percent during the second quarter, the highest rate in 14 years, up from 7.1 percent during the first quarter. Yesterday, Bank of England in its inflation report indicated that rates will not be raised for some time.
A bullish economic outlook from the central bank sent the Australian dollar to 11 month highs in Asia Friday before renewed jitters on the Shanghai stock exchange sparked a bout of profit taking.
Market expectation
The euro is under some pressure on Friday, as the slump in the Chinese stock markets dents risk appetite more broadly in Asia.
EURUSD bids seen placed between USD1.4255/50, a break below to open a deeper move toward USD1.4245/40 with further interest tucked in close behind at USD1.4235/30. Below here and rate can ease toward USD1.4220/10. Asian account offers noted at USD1.4295, with Swiss accounts sell interest seen at USD1.4315 ahead of stops placed on a break of USD1.4320.
EURGBP closed in NY at stg0.8618, the rate nudging up to stg0.8622 in early Asian trade (NY high stg0.8623) before easing back to stg0.8604. Rate currently trades around stg0.8618 into early Europe. Offers seen placed from stg0.8622 through to stg0.8630, a break to open a move on toward stg0.8640/45 ahead of stg0.8650/55. Support stg0.8605/00, a break to allow for a deeper move toward stg0.8590/85 ahead of stg0.8575/70.
Currency market reactions to data and other events could continue to be rather fickle for some time yet, given the still-rampant uncertainties relating to growth and also the low-liquidity summer environment, Said analysts.
Analysts said there's scope for the local unit to resume its climb higher if U.S. consumer confidence numbers due later surprises on the upside.

European Consumer Prices Fell More Than Estimated in July

Prices in the 16-member euro region fell 0.7 percent from the year-earlier month after declining 0.1 percent in June, the European Union statistics office in Luxembourg said today. The decline exceeded the 0.6 percent estimate published on July 31 and the median forecast of 30 economists surveyed byBloomberg News. In the month, prices declined 0.7 percent. Companies from Carrefour SA to Unilever have offered discounts to encourage consumers to spend just as a 39 percent drop in oil prices over the past year is pushing down inflation. The European Central Bank on Aug. 6 kept its Key interest rate at a record low to support the economy, with President Jean-Claude Trichet saying inflation will turn positive later this year.

Afternoon Forex Overview

The U.S. dollar slipped versus the Japanese yen and was little changed versus the euro Friday after the government said its consumer price index was unchanged in July, as analysts expected and easing concerns about inflation.The dollar bought JPY94.86, down from JPY95.32 in North American trade late Thursday.Japan's currency had been advancing throughout the session, though, garnering support on its safe-haven status.Among the three most traded currencies - yen, euro and dollar - the yen is seen as the safest bet now.Recovery in the U.S. appears under question as the dollar again nears its lowest levels of 2009 versus the euro. The July U.S. retail sales report disappointed Thursday, and could drive economists to revise third quarter U.S. gross domestic products lower.U.S. consumer prices fell last month at their fastest annual pace since 1950, an indication that inflation isn't a threat to the economy or the Federal Reserve - likely to keep U.S. interest rates and the yield on the dollar low.Market expectationEURUSD ebbing lower as euro-yen provides weight and as pair tracks cable lower, US stock futures easing lower and perhaps offering some risk-related pressure as well. Backdrop of chatter of upbeat US IP data ahead perhaps also giving the greenback a boost here, though traders struggling to nail down good correlations in this market. Euro holding marginally above the overnight low at USD1.4253, talk of bids around USD1.4245.Pound slowly squeezing lower extends correction away from pre CPI release recovery highs at USD1.6606 to USD1.6578 at writing. As mentioned earlier next support noted at USD1.6560, a break here may open a deeper move toward USD1.6545/40 with stops below.EURGBP extends corrective pullback through support at stg0.8600, the rate posting fresh intraday lows at stg0.8594 but seen meeting support from reported demand placed between stg0.8595/90. A break here may open a deeper move toward stg0.8585/80. Move seen as sterling picks up decent demand interest and cable edging back above USD1.6600.The yen may also be recovering from recent losses after the Democratic Party of Japan's signaled earlier this week it might tolerate a rising yen if it wins in an election this month, reflecting a view that a strong currency might eventually benefit the ailing economy.

"The cost of living in the U.S. was unchanged in July, underscoring the Federal Reserve’s view that inflation will be contained. The flat reading matc

"The cost of living in the U.S. was unchanged in July, underscoring the Federal Reserve’s view that inflation will be contained. The flat reading matched the median forecast of economists surveyed by Bloomberg News and followed a 0.7 percent increase in June, data from the Labor Department showed today in Washington. Excluding food and energy costs, the so-called core index rose 0.1 percent, also as anticipated.

U.S. Factory Output Likely Rose in July as Auto Plants Reopened

U.S. industrial production probably rose for the first time in nine months after mid-year retooling at automakers and as a federal “cash-for-clunkers” program spurred demand for cars, economists said before reports today. Output at manufacturers, mines and utilities climbed 0.4 percent, erasing the previous month’s decline, according to the median forecast in a Bloomberg News survey ahead of today’s report from the Federal Reserve. Other data may show the cost of living was unchanged in July while consumer confidence rose this month.

U.S. Industrial Production Rose in July as Auto Plants Opened

"U.S. industrial production rose for the first time in nine months in July after mid-year retooling at automakers and as a federal “cash-for-clunkers” program spurred demand for cars.The 0.5 percent increase in output at manufacturers, mines and utilities was more than forecast and followed a 0.4 percent decline in June, Federal Reserve figures showed today in Washington. Capacity utilization, the proportion of plants in use, rose from its lowest since record-keeping began in 1967.

FriAug 14

FriAug 14
2:45am
EUR
French Prelim Non-Farm Payrolls q/q



-0.5%
-0.7%
-1.1%



5:00am
EUR
CPI y/y



-0.7%
-0.6%
-0.6%



5:00am
EUR
Core CPI y/y



1.3%
1.4%
1.4%



8:30am
CAD
Manufacturing Sales m/m



1.9%
0.0%
-4.9%



8:30am
CAD
New Motor Vehicle Sales m/m



-0.6%
-0.9%
0.4%



8:30am
USD
Core CPI m/m



0.1%
0.1%
0.2%



8:30am
USD
CPI m/m



0.0%
0.0%
0.7%



9:15am
USD
Capacity Utilization Rate



68.5%
68.2%
68.1%



9:15am
USD
Industrial Production m/m



0.5%
0.4%
-0.4%



9:55am
USD
Prelim UoM Consumer Sentiment



63.2
69.1
66.0



9:55am
USD
Prelim UoM Inflation Expectations



2.8%
2.9%

Aug 13

ThuAug 13
2:00am
EUR
German Prelim GDP q/q



0.3%
-0.2%
-3.5%



2:45am
EUR
French Prelim GDP q/q



0.3%
-0.3%
-1.3%



3:15am
CHF
PPI m/m



0.0%
0.1%
0.0%



4:00am
EUR
ECB Monthly Bulletin



5:00am
EUR
Flash GDP q/q



-0.1%
-0.5%
-2.5%



8:30am
USD
Core Retail Sales m/m



-0.6%
0.2%
0.5%



8:30am
USD
Retail Sales m/m



-0.1%
0.8%
0.8%



8:30am
USD
Unemployment Claims



558K
545K
554K



8:30am
USD
Import Prices m/m



-0.7%
-0.3%
2.6%



10:00am
USD
Business Inventories m/m



-1.1%
-0.9%
-1.2%



10:30am
USD
Natural Gas Storage



63B
71B
66B



6:45pm
NZD
Retail Sales m/m



0.1%
-0.3%
0.7%



6:45pm
NZD
Core Retail Sales m/m



-0.4%
-0.6%
1.5%



7:30pm
AUD
RBA Gov Stevens Speaks



7:50pm
JPY
Monetary Policy Meeting Minutes



7:50pm
JPY
Tertiary Industry Activity m/m



0.1%
-0.3%
-0.3%

Aug 12

WedAug 12
12:30am
JPY
Revised Industrial Production m/m



2.3%
2.4%
2.4%



1:00am
JPY
BOJ Monthly Report



2:45am
EUR
French CPI m/m



-0.4%
-0.4%
0.1%



4:30am
GBP
Claimant Count Change



24.9K
25.3K
21.5K



4:30am
GBP
Average Earnings Index 3m/y



2.5%
2.3%
2.3%



4:30am
GBP
Unemployment Rate



7.8%
7.7%
7.6%



5:00am
EUR
Industrial Production m/m



-0.6%
0.3%
0.6%



5:30am
GBP
BOE Gov King Speaks



5:30am
GBP
BOE Inflation Report



8:30am
CAD
Trade Balance



-0.1B
-0.6B
-1.1B



8:30am
CAD
NHPI m/m



-0.2%
0.0%
-0.1%



8:30am
USD
Trade Balance



-27.0B
-28.4B
-26.0B



10:30am
USD
Crude Oil Inventories



2.5M
0.7M
1.7M



2:00pm
USD
Federal Budget Balance



-180.7B
-175.0B
-94.3B



2:15pm
USD
FOMC Statement



2:15pm
USD
Federal Funds Rate



<0.25%
<0.25%
<0.25%



6:17pm
NZD
Business NZ Manufacturing Index



49.7
46.5



6:48pm
NZD
FPI m/m



0.6%
2.8%



9:00pm
AUD
MI Inflation Expectations



3.5%
3.2%

Aug 11

TueAug 11
1:00am
JPY
Household Confidence



39.4
39.2
37.6



2:00am
EUR
German Final CPI m/m



0.0%
-0.1%
-0.1%



2:00am
EUR
German WPI m/m



-0.5%
0.1%
0.9%



2:45am
EUR
French Gov Budget Balance



-86.6B
-88.7B



3:19am
JPY
BOJ Press Conference



4:30am
GBP
Trade Balance



-6.5B
-6.3B
-6.2B



4:34am
GBP
DCLG HPI y/y



-10.7%
-11.8%
-12.7%



8:15am
CAD
Housing Starts



132K
143K
138K



8:30am
USD
Prelim Nonfarm Productivity q/q



6.4%
5.2%
0.3%



8:30am
USD
Prelim Unit Labor Costs q/q



-5.8%
-2.3%
-2.7%



10:00am
USD
IBD/TIPP Economic Optimism



50.3
47.4
46.3



10:00am
USD
Wholesale Inventories m/m



-1.7%
-1.0%
-1.2%



7:50pm
JPY
CGPI y/y



-8.5%
-8.8%
-6.7%



9:00pm
AUD
Westpac Consumer Sentiment



3.7%
9.3%



9:30pm
AUD
Wage Price Index q/q



0.8%
0.8%
0.8%

Aug 10

MonAug 10
1:00am
JPY
Economy Watchers Sentiment



42.4
43.4
42.2



2:00am
JPY
Prelim Machine Tool Orders y/y



-72.2%
-72.8%



2:45am
EUR
French Industrial Production m/m



0.3%
-0.1%
2.8%



4:30am
EUR
Sentix Investor Confidence



-17.0
-26.0
-31.3



7:01pm
GBP
BRC Retail Sales Monitor y/y



1.8%
1.4%



7:01pm
GBP
RICS House Price Balance



-8.1%
-9.4%
-17.6%



9:30pm
AUD
NAB Business Confidence



10
4



10:00pm
CNY
Industrial Production y/y



10.8%
11.5%
10.7%



10:00pm
CNY
CPI y/y



-1.8%
-1.7%
-1.7%



10:00pm
CNY
Fixed Asset Investment ytd/y



32.9%
34.2%
33.6%



10:00pm
CNY
NBS Press Conference



10:00pm
CNY
PPI y/y



-8.2%
-8.3%
-7.8%



10:00pm
CNY
Retail Sales y/y



15.2%
15.1%
15.0%



10:50pm
CNY
Trade Balance



10.6B
10.1B
8.3B



10:53pm
JPY
Monetary Policy Statement



10:53pm
JPY
Overnight Call Rate



0.10%
0.10%
0.10%

Aug 9

Aug 9
Filter
vbmenu_register("calfilters");

Date
5:34pm
Currency
Impact

Detail
Actual
Forecast
Previous
Chart
SunAug 9
7:50pm
JPY
Core Machinery Orders m/m



9.7%
2.8%
-3.0%



7:50pm
JPY
Bank Lending y/y



2.1%
2.4%



7:50pm
JPY
Current Account



1.80T
1.42T
1.02T



7:50pm
JPY
M2 Money Stock y/y



2.7%
2.6%
2.5%



9:30pm
AUD
Home Loans m/m



1.1%
1.9%
2.2%