Euro crack after German Ifo survey, EU elections add uncertainty . . . . . . . . . . . . . The euro headed for a third weekly decline on Friday, falling more than 0.26 percent after data showed German business confidence fell, adding to signs that may prompt the European Central Bank to boost stimulus as soon as June. The 18-nation common currency fell broadly on Friday, still trading near three-month low against the greenback as investors sold the common currency on exceptions the ECB to ease policy next month after a report showed the IFO institute’s German business climate index, fell to 110.9 this month from 111.2 in April . Data came hours after a separate report showed Germany`s economy grew a robust 0.8 percent in the first quarter of 2014, doubling the rate of the previous quarter. Final growth figure showed the economy expanded by 0.8 percent from the previous quarter, or 2.3 percent from year ago, meeting analyst’s initial forecasts. The euro fell 0.27 percent against the U.S. dollar, pushing the EURUSD pair to trade at $1.36213, compared to $1.36547 session opening. The pair so far hit session high at $1.36584 and low at $1.36163. Technically, the pair traded with downside bias, below $1.3665 and this support that turned now into resistance will keep the downside pressure valid. Only a breach of $1.3700 will weaken our positive expectations. ECB set to ease policy in June Euro was still looking shaky after two weeks of hints of more monetary easing by the European Central Bank (ECB). President Mario Draghi said this month officials are ready to cut what little it has left of its main interest rate or add further stimulus in an attempt to stop the euro from rising and inflation from falling more. Draghi gave a very clear signal earlier in May that the Governing Council was comfortable with cutting rates in June and will need to deliver in order to satisfy clear market expectations for a cut as Eurozone inflation is stuck well below half the central bank`s target of close to 2 percent. European parliament elections 2014 weigh on euro The single currency was also weighed by fears that European Union election results at the weekend could destabilize some Eurozone governments at home. Balloting for EU parliament elections will run through May 25. The election, held every five years, gives voters their only direct say in who governs the 28-member European Union. The voting comes as Europe struggles to remain united amid a major security challenge posed by Russia’s meddling in Ukraine. Greece, Spain receive rating upgrades Two countries that have been trapped in the Eurozone`s recession both received upgrades from ratings agencies on their sovereign debt on Friday, as remedial measures taken by both nations over the last few years started to support economic recovery and revamp fiscal positions. Standard & Poor`s Ratings Services raised the long-term sovereign ratings of Spain to `BBB` from `BBB-`. The `stable` outlook on ratings suggests that the risks to the ratings remain balanced over the next two years. Elsewhere, Fitch Ratings lifted Greece rating by one notch, although the ratings were raised to `B` from `B-`, it still remains in junk territory, with outlook stable. #egyptyard
Posted on: Fri, 23 May 2014 11:48:55 +0000
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