U.S. dollar continues rally against euro, amid possible rate hike delay

Investing.com –

Investing.com — The U.S. dollar rallied by more than 1% against the euro on Tuesday, amid weaker than expected services data in the euro zone and expectations for a delayed interest rate hike by the Federal Reserve.

EUR/USD fell 0.0116 or 1.06% in U.S. afternoon trading to 1.0807, moving steadily lower from a daily-high of 1.0956 in European morning trading. European markets reopened on Tuesday after a four-day weekend for the Easter holiday.

The pair likely gained support at a low of 1.05 from March 11 and resistance at 1.11, the high from Mar. 4. On Monday, EUR/USD moved above 1.10 for the first time since Mar. 25, before falling back to 1.094.

While the Markit Eurozone Services Business Activity Index increased from 53.7 in February to 54.2 in March, expansion in output still fell below previous estimates of a 54.3 reading. Increases in Germany, Italy and Spain accelerated growth while the United Kingdom’s service-sector PMI peaked at 58.9, to reach a multi-month high.

Price discounting throughout the euro zone drove growth on the continent.

“The PMIs are indicating somewhat sluggish GDP growth of 0.3% for the first quarter.,” said Chris Williamson, Chief Economist at Markit. “However, the important message from the survey data is that the pace of expansion looks set to gather pace in coming months.

Meanwhile, in the U.S. Federal Reserve Bank of Minneapolis president Narayana Kocherlakota said at a speech on Tuesday that the Fed may not need to raise its benchmark Federal Funds Rate until the second half of 2016.

“In light of the outlook for unduly low employment and unduly low inflation, the Fed can be both late and slow in reducing the level of monetary accommodation,” Kocherlakota said in a speech to the Chamber of Commerce in Bismarck, N.D.

The comments came in light of a disappointing U.S. jobs report last Friday when the U.S. Bureau of Labor Statistics said in its monthly jobs report that the economy added 126,000 in March, halting a streak of 12 consecutive months of job growth that exceeded 200,000. The modest job increases nationwide marked the weakest period of hiring in 15 months. In terms of average weekly earnings, employees nationwide received the smallest annual gains in wages since last June.

The labor force participation rate, which measures the number of people who are either employed or actively looking for work, also painted a bleak outlook. During the month of March, the rate ticked down to 62.7%, the lowest level in 36 years.

In mid-March, Federal Reserve chair Janet Yellen indicated that the Fed could begin raising interest rates when it was “reasonably confident” that inflation will move toward its target inflation of 2%. Yellen added that the Fed will take a “data-driven” approach to potential liftoff by keeping a close eye on wage and GDP growth before raising rates.

Yields on the U.S. 2-year, meanwhile, have ticked up to 0.520, after reaching a two-month low at 0.47 late last week. At Tuesday’s 3-year note auction of U.S. Treasuries, yields stood at 0.865% with average demand of $ 24 billion. Many analysts believe the lower yields reduce the possibility that the Federal Reserve could increase rates by June.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, edged up on Tuesday by 0.95 points to 98.16

Investing.com
Investing.com offers an extensive set of professional tools for the financial markets.
Read more News on Investing.com and download the new Investing.com apps for Android and iOS!

Shekel strengthens further against dollar

The shekel has strengthened sharply against the US dollar following the disappointing jobs figures released in the US on Friday. The representative shekel-dollar rate was set 0.45% lower today, in comparison with Thursday’s rate (the last time representative rates were set before the start of the Passover holiday), at NIS 3.956/$ , and the representative shekel-euro rate was set 0.02% lower, at NIS 4.2775/. Following the setting of the representative rates, the shekel continued to strengthen against the dollar, and the shekel-dollar exchange rate is currently a further 1.2% down, at NIS 3.9102/$ . Against the euro, the shekel is currently weaker by 0.83%, at NIS 4.313/.

FXCM Israel says in its market review this morning, “The shekel-dollar rate is falling in response to Friday’s disappointing employment figures from the US. The figures are the worst since 2013, arousing fears that the US economy is losing momentum, and cooling expectations of an interest rate hike in the US. If we see a continued decline in the next few months in the rate of creation of new jobs in the US, the Federal Reserve will have to defer its planned interest rate hike. Even in its most hawkish statements, the Federal Reserve has stressed that any interest rate rise depends on consistent improvement in the labor market.

“The disappointing jobs figure could be a signal for a sharp correction both in share indices and in the dollar on world markets. The shekel-dollar pair is now close to NIS 3.9/$ . A fall below this level could accelerate towards NIS 3.87/$ , and if this happens it is certainly conceivable that the Bank of Israel will intervene in trading in an attempt stem the decline.”

Published by Globes [online], Israel business news – www.globes-online.com – on April 6, 2015

Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Shekel-dollar rate sinks

The local foreign exchange market has given its first reaction this morning to last week’s disappointing US jobs report. The The shekel-dollar exchange rate is currently down 0.9% in comparison with Thursday’s representative rate (the last time representative rates were set before the start of the Passover holiday), at NIS 3.9203/$ , while the shekel-euro rate is up 0.59%, at NIS 4.3026/.

Just 126 thousand new jobs were added to the US labor market in March. This compares with a forecast of 245 thousand, and comes after 295 thousand jobs were added in February. The US unemployment rate remains at 5.5%, as expected.

FXCM Israel says in its market review this morning, “The shekel-dollar rate is falling in response to Friday’s disappointing employment figures from the US. The figures are the worst since 2013, arousing fears that the US economy is losing momentum, and cooling expectations of an interest rate hike in the US. If we see a continued decline in the next few months in the rate of creation of new jobs in the US, the Federal Reserve will have to defer its planned interest rate hike. Even in its most hawkish statements, the Federal Reserve has stressed that any interest rate rise depends on consistent improvement in the labor market.

“The disappointing jobs figure could be a signal for a sharp correction both in share indices and in the dollar on world markets. The shekel-dollar pair is now close to NIS 3.9/$ . A fall below this level could accelerate towards NIS 3.87/$ , and if this happens it is certainly conceivable that the Bank of Israel will intervene in trading in an attempt stem the decline.”

Published by Globes [online], Israel business news – www.globes-online.com – on April 6, 2015

Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Ruble sinks to new lows despite rate hike

Moscow (AFP) – The ruble sank Friday to fresh record lows as oil prices plunged further, prompting apparent intervention from Russia’s central bank.

The Russian currency weakened to 72.14 against the euro and 57.98 against the dollar, before trading in the greenback suddenly jumped — in what appeared to be action by the central bank to halt the ruble’s haemorrhage.

“The ruble’s fall continued Friday morning…. After this followed a new intervention from central bank, it pushed the ruble rate down,” said Alexei Mikheyev, an analyst at VTB-24 bank.

The effect was shortlived, however.

“About 80 percent of the fall in the dollar-ruble rate based on the intervention was won back in the next half hour,” Mikheyev said, criticising what he called a “toothless” strategy from the central bank.

Russia has spent more than $ 5 billion so far this month alone on market interventions to shore up the ruble, and concern is growing at the rate of depletion of its foreign currency reserves, which are down a fifth since the summer of 2013.

The central bank’s actions to shore up the ruble have so far proved futile, with its latest one percentage point interest rate hike on Thursday shrugged off by the market.

Since the beginning of the year, the ruble has lost 36 percent of its value against the euro and 42 percent against the dollar.

At the heart of the problem is plunging oil prices, which, coupled with Western sanctions over the Ukraine crisis, have hurt the Russian economy.

Half of Russia’s revenues come from oil and gas. Replenishing its coffers is therefore proving to be more difficult than expected.

Analysts say the market is shunning the ruble on Friday because the central bank had failed to take more decisive action to help the currency.

“The market is mainly being driven by the disappointment of what is viewed as overly conservative action on the part of the central bank of Russia in hiking the key rate only 100 basis points,” Alfa Bank said in a research note Friday.

Other analysts speculated that more drastic action may yet be applied.

“The central bank responded by raising interest rates, but this failed to stem the ruble‚Äôs fall, leading to speculation that capital controls may be introduced,” Capital Economics said.

By raising interest rates, the bank was hoping to make the currency more attractive to savers and help fight inflation, which is projected to reach 10 percent by the end of the year.

FOREX-Dollar recovers broadly on weak euro zone, UK data

* Euro retreats after poor industrial output, ZEW numbers

* Dollar recovers from 1-month low versus yen

* UK inflation, retail sales data hits sterling (Updates prices, adds comments; changes byline, dateline, previous LONDON)

By Sam Forgione

NEW YORK, Oct 14 (Reuters) – The U.S. dollar recovered against a basket of major currencies on Tuesday after worrying economic data out of the euro zone and United Kingdom underscored the relative health of the U.S. economy.

The dollar reversed Monday’s losses against the euro after euro zone industrial output and the ZEW indicator of German investor sentiment came in well below forecasts, renewing fears of another technical recession in the euro zone.

“There is just massive concern about where the European economy is going,” said Steven Englander, global head of G10 foreign exchange strategy at CitiFX in New York.

“If you’re revising down growth expectations globally, the U.S. is far from the most vulnerable economy,” he said on the reasoning behind the dollar’s recovery.

The concerns over global growth, particularly in Europe, overshadowed worries that the U.S. Federal Reserve would delay its first interest rate hike. The euro hit an 11-month low against the yen.

Concerns over a delay in the Fed’s timeline for hiking rates hurt the dollar on Monday. An interest rate hike is expected to boost the dollar by driving investment flows into the U.S.

The dollar bounced back from a one-month low against the Japanese yen, while the British sterling fell against the greenback on data showing a drop in September inflation and an unexpected fall in the BRC indicator of retail sales in the United Kingdom.

While the dollar was up against the yen, the global growth concerns limited the safe-haven yen’s losses.

“The overarching theme is not really a U.S.-centric story this morning, it’s more of a European story,” said Mark McCormick, currency strategist, at Credit Agricole in New York. The dollar and yen are considered safe-haven currencies.

The euro was last down 0.73 percent against the dollar at $ 1.2658, and down 0.57 percent against the yen at 135.41 yen. The euro hit an 11-month low of 135.05 yen.

The dollar was last up 0.17 percent against the yen at 107.02 yen after hitting a one-month low of 106.68 yen earlier in the session. The dollar also recovered against the Swiss franc and was last up 0.61 percent at 0.9539 franc.

Sterling was last down 1 percent against the dollar at $ 1.5921, not far from an 11-month low of $ 1.5906 hit earlier in the session. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.22 percent at 85.724.

U.S. Treasuries yields fell on the global growth anxiety, while U.S. stocks rebounded as investors focused on corporate earnings. The S&P 500 was last up 0.57 percent.

(Reporting by Sam Forgione; Editing by Meredith Mazzilli)

Sterling firms as focus turns to UK fundamentals, rate outlook

LONDON, Sept 22 (Reuters) – Sterling rose on Monday, inching back towards recent two-year highs against the euro and moving higher against the dollar as investors focused on Britain’s economic fundamentals and interest rate expectations after Scotland’s independence vote.

The euro traded 0.2 percent lower against sterling at 78.64 pence, not far off a two-year low of 78.10 struck on Friday amid relief over the Scots’ decision in a referendum to reject independence and to stay inside the United Kingdom.

The pound rose 0.35 percent against the dollar to trade at $ 1.6340, with the greenback coming under some pressure after it posted its 10th straight week of gains on Friday.

“We continue to see further upside to sterling this week as the currency should now return back to fundamental drivers, with the UK data obtaining more prominence again,” said Petr Krpata, currency strategist at ING.

“We still think that the pound has to do some more catching up following last week’s back-to-normal correction in short-end UK yields.”

He added that the UK two-year bond yield was not far from its July highs and a break above that levels would take it to its highest in over three years, giving sterling a boost.

With the uncertainty over the Scottish referendum out of the way, investors judged that one more obstacle to an interest rate hike from the Bank of England was cleared for the time being.

Sterling overnight interbank average rates are pricing in the chance of a first rate increase by the BoE in the spring of 2015. Analysts said sterling stood to gain more against the euro and yen since both the European Central Bank and the Bank of Japan are likely to stick with an ultra-loose monetary policy.

The U.S. Federal Reserve reiterated last week that, while near zero rates would be maintained for a considerable time, rate hikes could come at a faster rate next year and in 2016. The Fed nudged up its expected path of interest rate increases – or Fed dots – boosting yields on U.S. notes, and hence the appeal of the dollar.

And although the dollar gave back some of its gains on Monday, traders said the pound’s rebound against the greenback would be capped. They said uncertainty over future constitutional changes in the United Kingdom following the Scottish referendum could weigh on investment flows.

“We expect sterling/dollar rebounds to remain limited, keeping the downtrend intact,” Morgan Stanley said in a note.

“Political uncertainty is set to remain as the general election approaches next year and there is a constitutional debate regarding providing more powers to Scotland in combination with changes to English MPs only voting on English issues,” Morgan Stanley said in a note.

(Reporting by Anirban Nag; Editing by Gareth Jones)

Argentina default, U.S. rate hike worries hit European shares

* FTSEurofirst 300 falls 1.3 pct, lowest close in 3 months

* Blue-chip Euro STOXX 50 down 1.7 pct, hits 3-month low

* Worries about U.S. policy, Argentina default hit sentiment

* Europe’s volatility index surges 9.4 pct to 3-mth high

* Shares in Adidas and Banco Espirito Santo slump

By Atul Prakash

LONDON, July 31 (Reuters) – European shares fell sharply on Thursday, with the euro zone’s blue-chip index slipping to a three-month low, on concerns of an earlier than expected interest rate hike in the Uniteed States and a debt default by Argentina.

Spanish stocks came under severe pressure, with Madrid’s IBEX dropping 2.1 percent, as traders cited worries over Spanish companies’ exposure to Latin America after Argentina defaulted on its debt on Thursday.

Steep falls in some stocks following their earnings reports also hurt sentiment. The broader market sell-off accelerated in the afternoon after the U.S. market opened lower and extended losses later in the session, with the Euro STOXX 50 falling 1.7 percent to its lowest since mid-April. Europe’s main volatility index rose 9.4 percent to a three-month high.

Investors were jittery after solid growth numbers from the United States, the world’s biggest economy, on Wednesday and expectations that Friday’s U.S. non-farm payrolls numbers will surprise on the upside raised concerns that the Federal Reserve might start raising key interest rates earlier.

“The strong GDP data and an improving economic outlook have raised the risk of an early rate hike,” Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said. “Tomorrow’s U.S. non-farm payrolls data may further cement the view that a rate rise could happen earlier than expected.”

Data showed on Wednesday the U.S. economy rebounded sharply in the second quarter as consumers stepped up spending and businesses restocked, while Friday’s data is likely to show U.S. non-farm payrolls rose by 233,000 in July, which would mark the sixth month with job growth above 200,000.

Disappointing earnings reports also put pressure on some stocks, with German sportswear firm Adidas slumping 15.4 percent, the top faller on the FTSEurofirst 300, which ended 1.3 percent weaker at 1,349.34 points, its lowest close in three months and a weaker close for a second month.

Portugal’s Banco Espirito Santo sank nearly 50 percent at one point to a record low after booking a 3.6 billion euro first-half loss, and disappointing earnings at Spanish healthcare firm Grifols sent its shares down 14 percent.

BES, which closed 42 percent lower, pushed Portugal’s PSI 20 index 3.1 percent lower to underperform the wider market, while Adidas dragged Germany’s DAX 1.9 percent down after saying it will scale back plans to expand in Russia and overhaul its golf business.

However, overall results from European companies were relatively positive, with shares in Sanofi rising 2.3 percent after it raised its full-year profit outlook, Royal Dutch Shell gained 2.5 percent after reporting a 33 percent rise in quarterly earnings and CNH Industrial up 3.8 percent on higher second-quarter profit.

“Despite some decent earnings from a number of blue chips, the market is stuck in a range, with many negative catalysts including Argentina’s default at the forefront of investors’ minds,” said Lionel Jardin, head of institutional sales at Assya Capital, in Paris.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today’s European research round-up (Additional reporting by Blaise Robinson in Paris; Editing by Alison Williams)

Euro hit by concerns over tougher Russia sanctions, diverging rate outlook

imageLONDON: The euro hit an eight-month low against the dollar on Wednesday as worries over tougher sanctions on Russia and their potential impact on fragile euro zone growth drove investors away from the single currency.

The euro also fell against sterling, which was supported ahead of the latest minutes from the Bank of England’s Monetary Policy Committee, due at 0830 GMT. Markets will be looking for any signs of when an interest rate hike might come, with any move to a more hawkish tone likely to boost sterling further.

The Australian dollar rose over half a percent against the U.S. dollar, boosted by a higher-than-expected reading of a key gauge of underlying inflation in June, denting market speculation of future rate cuts.

The euro’s weakness was broad-based, dropping to its lowest in nearly two years against the British pound. The single currency fell to 78.83 pence, its lowest since August 2012.

Against the dollar, the euro fell to $ 1.3455, its lowest since November 2013, with investors eying more losses in coming days. The euro was down 0.2 percent against the yen at 136.45 yen, trading near its lowest in more than five months.

“There is quite broad-based pressure building on the euro and there are a number of factors driving that. Europe is directly exposed to Russia by trade – Germany in particular – so sanctions could potentially have a negative impact on the euro,” said Ian Stannard, a currency strategist at Morgan Stanley.

Stannard also said that comments overnight from Chinese officials, suggesting there have been capital outflows from China, would imply that China’s reserve accumulation is slowing, reducing the need for the purchase of alternative reserve currencies, of which the euro has been a main beneficiary.

Traders said it was significant that the euro had closed below $ 1.35 on Tuesday for the first time this year, making the currency appear technically weak. It could fall below reported option barriers at $ 1.34 in the coming days if flash PMI and German IFO data disappoint, they said.

DOLLAR STRENGTH

The dollar index, which tracks the greenback against a basket of six major rivals, was steady on the day at 80.781, not far from a Tuesday high of 80.837 touched on expectations that higher U.S. interest rates are on the horizon.

Data issued on Tuesday showed U.S. inflation was 0.3 percent in June, in line with most analysts’ forecasts, though core inflation, excluding volatile food and energy prices, was just 0.1 percent, about half of what analysts had forecast.

Despite the weaker-than-expected core inflation reading, markets still expect the U.S. Federal Reserve to continue tapering its bond purchase programme and then raise interest rates in the latter half of 2015.

“The U.S. will raise next year, while in Europe, by contrast, we might see more easing steps,” Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank in Tokyo.

The premium offered by two-year U.S. Treasuries over German debt has widened to around 46 basis points, levels not seen since 2007.

The Australian dollar added about 0.6 percent to buy $ 0.9446 , after spiking to a nearly two-week high of $ 0.9439 on the surprisingly high core inflation figures.

Copyright Reuters, 2014

FOREX-Euro hit by concerns over tougher Russia sanctions, diverging rate outlook

* Euro hits new lows against dollar and sterling

* BoE minutes in focus

* Australian dollar rises on surprisingly high core inflation

By Jemima Kelly

LONDON, July 23 (Reuters) – The euro hit an eight-month low against the dollar on Wednesday as worries over tougher sanctions on Russia and their potential impact on fragile euro zone growth drove investors away from the single currency.

The euro also fell against sterling, which was supported ahead of the latest minutes from the Bank of England’s Monetary Policy Committee, due at 0830 GMT. Markets will be looking for any signs of when an interest rate hike might come, with any move to a more hawkish tone likely to boost sterling further.

The Australian dollar rose over half a percent against the U.S. dollar, boosted by a higher-than-expected reading of a key gauge of underlying inflation in June, denting market speculation of future rate cuts.

The euro’s weakness was broad-based, dropping to its lowest in nearly two years against the British pound. The single currency fell to 78.83 pence, its lowest since August 2012.

Against the dollar, the euro fell to $ 1.3455, its lowest since November 2013, with investors eying more losses in coming days. The euro was down 0.2 percent against the yen at 136.45 yen, trading near its lowest in more than five months.

“There is quite broad-based pressure building on the euro and there are a number of factors driving that. Europe is directly exposed to Russia by trade – Germany in particular – so sanctions could potentially have a negative impact on the euro,” said Ian Stannard, a currency strategist at Morgan Stanley.

Stannard also said that comments overnight from Chinese officials, suggesting there have been capital outflows from China, would imply that China’s reserve accumulation is slowing, reducing the need for the purchase of alternative reserve currencies, of which the euro has been a main beneficiary.

Traders said it was significant that the euro had closed below $ 1.35 on Tuesday for the first time this year, making the currency appear technically weak. It could fall below reported option barriers at $ 1.34 in the coming days if flash PMI and German IFO data disappoint, they said.

DOLLAR STRENGTH

The dollar index, which tracks the greenback against a basket of six major rivals, was steady on the day at 80.781, not far from a Tuesday high of 80.837 touched on expectations that higher U.S. interest rates are on the horizon.

Data issued on Tuesday showed U.S. inflation was 0.3 percent in June, in line with most analysts’ forecasts, though core inflation, excluding volatile food and energy prices, was just 0.1 percent, about half of what analysts had forecast.

Despite the weaker-than-expected core inflation reading, markets still expect the U.S. Federal Reserve to continue tapering its bond purchase programme and then raise interest rates in the latter half of 2015.

“The U.S. will raise next year, while in Europe, by contrast, we might see more easing steps,” Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank in Tokyo.

The premium offered by two-year U.S. Treasuries over German debt has widened to around 46 basis points, levels not seen since 2007.

The Australian dollar added about 0.6 percent to buy $ 0.9446 , after spiking to a nearly two-week high of $ 0.9439 on the surprisingly high core inflation figures.

(Additional reporting by Lisa Twaronite; Editing by Susan Fenton)

Polish zloty falls on lower chances for more rate hikes – CNBC

WARSAW, May 9 (Reuters) – The Polish zloty fell 0.5 percent against the euro after the central bank Governor Marek Belka played down chances for another interest rate hike following the surprising increase in the cost of credit on Wednesday. The zloty …