Germany

A more synchronous slowdown

The single currency is starting the week on the back foot as it flirts with the 1.29 level on EUR/USD, largely owing to the negative reading on the latest German Ifo number, the main business confidence survey in the eurozone’s largest economy. Looking back over the past 10 years, the latest reading is consistent with growth around the 0.5% around in annual terms. With the German economy having grown a modest 0.5% and 0.3% QoQ in the previous two quarters, it’s not that much of a stretch to see further negative readings into the end of the year.
Tovább »

24/09/2012 @ 10:25 GMT

Moving on from Germany

So, was it worth the wait? The German constitutional court decision that has been cited as a risk event for weeks now has delivered its verdict on the legality of the permanent eurozone rescue fund (the ESM) and it’s broadly falling into line with expectations. In other words, it was a “Yes” going ahead for final ratification, but with the expected caveat that German’s liability would be limited to the €190bn as determined by relative capital shares.
Tovább »

12/09/2012 @ 09:33 GMT

The euro waiting game

From a tentative start, EUR/USD pushed higher on the back of the latest headlines regarding tomorrow’s German constitutional court decision on the permanent rescue fund, the ESM. There were suggestions overnight that it could be delayed beyond tomorrow on some minor technicality, but this was quickly swept aside. They key 200 day moving average currently sits around 1.2835 and there appears to be a decent amount of resistance ahead of that level.
Tovább »

11/09/2012 @ 11:52 GMT

The last line in the sand?

The eurozone crisis has had its fair share of lines in the sand, not to mention ‘make or break’ summits of EU leaders. The mid-October meeting is now turning into one of those red line scenarios, with the timing of the latest troika mission to Greece (starting early September) reinforcing the growing feeling that continuing with more support for Greece and more slippage of the country’s targets and reforms cannot continue. But the problem is that EU leaders have not or cannot agree on the alternative and Greece knows it. What does this mean for FX and the single currency?
Tovább »

28/08/2012 @ 07:11 GMT

Timing the euro reversal

The German IFO business confidence data used to be the key data release in the eurozone, but the sovereign crisis has firmly bumped that on the head. Economic performance in the core, whilst naturally important, does not and cannot overcome the monumental issues in many peripheral countries, especially when Germany remains adamant that the fruits of that relatively better performance are not going to seep south.
Tovább »

27/08/2012 @ 09:34 GMT

Critical Week for Europe

We face another critical week for the euro project, with an increasing number of politicians in northern Europe willing to voice their preparedness to cut Greece loose. For her part, the German Chancellor is playing it straight, suggesting after her meeting with Greek PM Samaras on Friday that she would like Greece to remain within the single currency. EUR/USD experienced a choppy session Friday, but was overall biased lower ahead of the long weekend in the UK, the euro falling through the 1.25 level at one stage.
Tovább »

27/08/2012 @ 06:16 GMT

Promising the world

It seems that the eurozone is not short of pledges “to do everything” these days. After the comments from the ECB President on Thursday, there was a joint statement from Germany and France on Friday, followed by a similar one from Germany and Italy over the weekend. Once again, Merkel and Monti pledged that they “will do everything to protect the eurozone”. There were also similar comments from the Luxembourg prime minister (who also heads the group of eurozone finance ministers), who said: “I don’t want to fuel expectations, but… we have reached a decisive point”.
Tovább »

30/07/2012 @ 07:22 GMT

Bundesbank pours on cold water

Many felt it was only a matter of time before the German central bank came out and put a downer on the more upbeat remarks we have heard from other ECB council members so far this week. It was a spokesman for the Bundesbank which stated that its stance on bond-buying (overall it has been opposed) and giving the ESM a banking license (also opposed) was unchanged. Of course, neither should surprise, but it has helped to maintain the pull-back on EUR/USD which was in evidence early on during the European session.
Tovább »

27/07/2012 @ 11:24 GMT

It’s not the economy

The euro price action this morning has unwound some of yesterday’s bearishness, but the jump back to the 1.21 level on EUR/USD appears to be down more to positioning and some stops being triggered than anything else. Certainly the comments from ECB Governing Council member Nowotny on the possibility of giving the ESM permanent rescue mechanism a banking license do not justify the jump higher we have seen. As we have written about previously, it’s the euro crosses that have been a better reflection of the bearishness towards the euro, such as EUR/JPY and, to a lesser extent, EUR/GBP.
Tovább »

25/07/2012 @ 09:19 GMT

Struggling for eurozone growth

One of the things European leaders were in agreement on at their latest crisis summit was the need for growth. That’s the easy part. Delivering it when the global economy is under pressure and austerity is being demanded of many eurozone nations is quite another matter. The latest purchasing managers’ numbers for the eurozone bear this out with the provisional readings for France, Germany and the eurozone showing that even supposed ‘core’ countries are struggling to keep their heads above water.
Tovább »

24/07/2012 @ 10:05 GMT