Lagarde Says ECB Watching Strong Euro Carefully

Trading 10 sept 2020 Commentaire »

European Central Bank President Christine Lagarde said on Thursday that policymakers are watching the appreciation in the euro closely for any impact on prices, and reiterated that the bank stands ready to adjust all its tools when needed to support the fragile economic recovery in the euro area. The Governing Council extensively discussed the implications of a strong euro in the latest policy meeting, Lagarde said in the post-decision press conference. "We have to monitor carefully such a matter," she said. However, policymakers did not see an immediate need to act on it, she added. The ECB does not target the exchange rate, Lagarde reiterated. Earlier on Thursday, the central bank left its key interest rates and its pandemic emergency purchase programme unchanged and reaffirmed its forward guidance. "The incoming data since our last monetary policy meeting in July suggest a strong rebound in activity broadly in line with previous expectations, although the level of activity remains well below the levels prevailing before the coronavirus (COVID-19) pandemic," Lagarde said.

The strength of the recovery remains surrounded by significant uncertainty, as it continues to be highly dependent on the future evolution of the pandemic and the success of containment policies, the ECB chief stressed.

Ample monetary stimulus remains necessary to support the economic recovery and to safeguard medium-term price stability and hence, the bank reconfirmed its accommodative monetary policy stance, Lagarde added.

Further, she said the monetary policy measures taken since early March are providing "crucial support" to underpin the euro area recovery and to safeguard medium-term price stability.

"The increases in coronavirus infection rates during the summer months constitute headwinds to the short-term outlook," Lagarde said.

During the press conference, Lagarde unveiled the latest ECB staff macroeconomic projections that showed that the Eurozone growth forecast for this year was revised up to -8 percent from -8.7 percent predicted in June. The growth projection for next year was lowered slightly to 5 percent from 5.2 percent and the outlook for 2022 was cut to 3.2 percent from 3.3 percent. The inflation projection for this year was maintained at 0.3 percent. The projection for next year was raised to 1.0 percent from 0.8 percent and the outlook for 2022 was left unchanged at 1.3 percent.


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*U.S. Crude Oil Inventories Rise By 2.0 Million Barrels In Week Ended 9/4

Trading 10 sept 2020 Commentaire »

U.S. Crude Oil Inventories Rise By 2.0 Million Barrels In Week Ended 9/4


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Euro Firms As Lagarde Says ECB Does Not Target Currency Rate

Trading 10 sept 2020 Commentaire »

The euro spiked higher against its major opponents in the European session on Thursday, after the European Central Bank President Christine Lagarde said that the bank doesn't target the exchange rate but would watch currency movements that could impact inflation.

The ECB discussed the recent appreciation of the euro, but the bank's mandate is price stability, Lagarde said in a news conference in Frankfurt.

Incoming data suggested a strong rebound in activity broadly in line with previous expectations, although the level of activity remains well below the levels prevailing before the coronavirus pandemic, Lagarde told.

The monetary policy measures that have been implemented since early March are providing crucial support to underpin the recovery of the euro area economy and to safeguard medium-term price stability.

The ECB lifted its forecast for real GDP growth in 2020 to -8.0 percent from a fall of 8.7 percent estimated in June.

The Governing Council maintained the main refi rate at a record low of zero percent and the deposit rate at -0.50 percent. The marginal lending facility rate is at 0.25 percent. The decision was in line with expectations.

"The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics," the bank said.

The Governing Council retained the pandemic emergency purchase programme at EUR 1.35 trillion.

Net asset purchases under the PEPP will be conducted until at least the end of June 2021 and, in any case, until the Governing Council judges that the coronavirus crisis phase is over.

The currency was higher against its major counterparts in the Asian session, except the franc.

The euro appreciated 0.8 percent against the greenback, approaching an 8-day high of 1.1895. The pair had closed Wednesday's deals at 1.1803. Next immediate resistance for the euro is likely seen around the 1.20 level.

Data from the Labor Department showed that first-time claims for U.S. unemployment benefits came in unchanged in the week ended September 5.

The report said initial jobless claims came in at 884,000, unchanged from the previous week's revised level. Economists had expected jobless claims to drop to 846,000 from the 881,000 originally reported for the previous week.

The euro added 0.8 percent to an 8-day high of 126.28 against the yen, after falling to 125.26 at 5:00 pm ET. The EUR/JPY pair was worth 125.32 when it ended deals on Wednesday. The euro is likely to challenge resistance around the 127.5 region, if it gains again.

Data from the Cabinet Office showed that Japan core machine orders gained a seasonally adjusted 6.3 percent on month in July - coming in at 751.3 billion yen.

That beat expectations for an increase of 1.9 percent following the 7.6 percent decline in June.

The euro bounced off to 1.0787 against the franc, up by 0.3 percent from a 10-day low of 1.0750 seen at 5:15 am ET. At Wednesday's close, the pair was valued at 1.0769. Should the euro strengthens further, it is likely to test resistance around the 1.10 region.

Extending early rally, the euro gained 1.1 percent to a 5-1/2-month high of 0.9179 against the pound. The EUR/GBP pair had finished yesterday's trading session at 0.9076. The euro is seen finding resistance around the 0.93 mark.

Survey data from the Royal Institution of Chartered Surveyors showed that UK house prices increased at the strongest pace since 2016 as almost all regions logged price increases.

The house price balance rose to +44 percent in August, the highest reading since 2016, from +13 percent registered in July. The expected balance was +25 percent.

The euro strengthened to 1.6314 against the aussie, from a session's low of 1.6197 seen at 5:00 pm ET. The euro-aussie pair was worth 1.6197 at Wednesday's close. Extension of the euro's uptrend may lead it to a resistance around the 1.66 region.

Having declined to a 2-day low of 1.7652 at 5:30 pm ET, the euro recovered to 1.7755 against the kiwi. At yesterday's trading close, the pair was quoted at 1.7658. The euro may locate resistance around the 1.82 mark.

Following a 2-day drop to 1.5509 at 5:00 pm ET, the euro turned higher against the loonie, with the pair trading at 1.5569. The euro was trading at 1.5515 a loonie at yesterday's close. Further rally may take the euro to a resistance around the 1.58 area.


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U.S. Producer Prices Rise 0.3% In August, Slightly More Than Expected

Trading 10 sept 2020 Commentaire »

Producer prices in the U.S. increased by slightly more than expected in the month of August, according to a report released by the Labor Department on Thursday.

The Labor Department said its producer price index for final demand rose by 0.3 percent in August after climbing by 0.6 percent in July. Economists had expected prices to edge up by 0.2 percent.

The slightly stronger than expected price growth came despite a modest pullback in energy prices, which edged down by 0.1 percent in August after spiking by 5.3 percent in July.

The report showed food prices also fell by 0.4 percent in August after declining by 0.5 percent in the previous month.

Excluding food and energy prices, core producer prices climbed by 0.4 percent in August following a 0.5 percent advance in July. Core prices were also expected to tick up by 0.2 percent.

The bigger than expected increase in core prices came as prices for final demand services rose by 0.5 percent for the second straight month.

Prices for trade services led the way higher, jumping by 1.2 percent in August after climbing by 0.8 percent in July.

The report showed more modest increases in prices for transportation and warehousing and other services, which rose by 0.2 percent and 0.3 percent, respectively.

"The moderate advance in August producer prices confirms that underlying price dynamics continue to gradually normalize," said Lydia Boussour, Senior U.S. Economist at Oxford Economics.

She added, "While some see high inflation lurking around the corner, we believe there is little scope for prices to heat up meaningfully as the economy continues to only slowly recover from the Covid-19 crisis."

Compared to the same month a year ago, producer prices in August were down by 0.2 percent following a 0.4 percent drop in July. Core prices were up 0.6 percent year-over-year.

On Friday, the Labor Department is scheduled to release a separate report on consumer prices in the month of August.

Economists expect consumer prices to rise by 0.3 percent in August following a 0.6 percent increase in July. Core prices are expected to inch up by 0.2 percent after climbing by 0.6 percent.


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U.S. Weekly Jobless Claims Unexpectedly Unchanged At 884,000

Trading 10 sept 2020 Commentaire »

First-time claims for U.S. unemployment benefits came in unchanged in the week ended September 5th, the Labor Department revealed in a report on Thursday.

The report said initial jobless claims came in at 884,000, unchanged from the previous week's revised level. Economists had expected jobless claims to drop to 846,000 from the 881,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average fell to 970,750, a decrease of 21,750 from the previous week's revised average of 992,500.

Meanwhile, the report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, climbed by 93,000 to 13.385 million in the week ended August 29th.

The four-week moving average of continuing claims still tumbled to 13,982,000, a decrease of 523,750 from the previous week's revised average of 14,505,750.

"The data show that despite job gains and a fall in the unemployment rate in August, layoffs remain widespread and the labor market remains in a fragile place at a critical juncture," said Nancy Vanden Houten, Lead U.S. Economist at Capital Economics.

She added, "Failure on the part of policymakers to enact another fiscal relief package poses significant downside risks to the economy and labor market."

Last Friday, the Labor Department released a separate report showing another substantial increase in U.S. employment in the month of August, although the pace of job growth continued to slow from the record spike seen in June.

The Labor Department said non-farm payroll employment surged up by 1.371 million jobs in August after spiking by a downwardly revised 1.734 million jobs in July and soaring by 4.781 million jobs in June.

Economists had expected employment to jump by about 1.400 million jobs compared to the addition of 1.763 million jobs originally reported for the previous month.

The strong job growth in August was partly due to the hiring of 238,000 temporary 2020 Census workers, which contributed to a significant increase in government employment.

The continued job growth contributed to a much bigger than expected drop in the unemployment rate, which fell to 8.4 percent in August from 10.2 percent in July. Economists had expected the unemployment rate to edge down to 9.8 percent.


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Crude Oil Futures Drift Lower

Trading 10 sept 2020 Commentaire »

Crude oil prices are lower Thursday morning amid concerns about outlook for fuel demand after data from American Petroleum Institute showed a jump in U.S. crude stockpiles last week.

As coronavirus cases continue to rise in several countries, it is feared that crude supplies will far exceed demand, considering the fact that OPEC members have eased output curbs and have been producing more oil since last month.

West Texas Intermediate Crude oil futures for October are down $0.65 or 1.7% at $37.40 a barrel.

Brent crude futures are lower by $0.56 or 1.4% at $40.23 a barrel.

According to a report from the American Petroleum Institute, oil stockpiles rose by 2.970 million barrels during the week ended September 4, as against expectations for a 1.2 million barrels drawdown.

Gasoline supplies dropped by 6.892 million barrels, while distillate inventories increased 2.293 million barrels last week.

The Energy Information Administration (EIA) is scheduled to release its weekly inventory data at 10.30 am ET.


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*Euro Gains To 1.0784 Against Franc

Trading 10 sept 2020 Commentaire »

Euro Gains To 1.0784 Against Franc


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*ECB Retains 2022 Eurozone Inflation Forecast Unchanged At 1.3%

Trading 10 sept 2020 Commentaire »

ECB Retains 2022 Eurozone Inflation Forecast Unchanged At 1.3%


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*Euro Hits 5-1/2-month High Of 0.9179 Against Pound

Trading 10 sept 2020 Commentaire »

Euro Hits 5-1/2-month High Of 0.9179 Against Pound


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*ECB Raises 2021 Eurozone Inflation Outlook To 1.0% From 0.8%

Trading 10 sept 2020 Commentaire »

ECB Raises 2021 Eurozone Inflation Outlook To 1.0% From 0.8%


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