EUR/USD has gained ground, as the Europgroup approved the next installment of aid to Greece. The EU Financial Ministers will be meeting in Brussels on Tuesday. In economic news, the markets will be hoping for good news from German and Eurozone ZEW Economic Sentiments. ECB President Mario Draghi, whose recent optimistic comments on the Euozone lifted the euro, will be addressing an industrial forum in Frankfurt. In the US, today’s highlight is Existing Home Sales.
- Asian session: Euro/dollar climbed higher, touching a high of 1.3371. The pair then consolidated at 1.3360. The pair has edged lower in the European session.
- Current range: 1.3290 to 1.3360.
- Below: 1.3290, 1.3255, 1.3170, 1.3130, 1.3110, 1,3030, 1.30, 1.2960, 1.28, 1.2750, 1.2690, 1.2624 and 1.2590.
- Above: 1.3360, 1.34, 1.3480, 1.36, 1.3750 and 1.3838.
- 1.3360 is fluid, and has already seen activity today. There is stronger resistance at 1.34.
- On the downside, 1.3290 is the next support level.
Euro/dollar posts gains as Eurogroup approves Greek aid – click on the graph to enlarge.
- All Day: ECOFIN Meetings.
- 10:00 German ZEW Economic Sentiment. Exp. 12.2 points.
- 10:00 Eurozone ZEW Economic Sentiment. Exp. 14.1 points.
- Tentative: Spanish HPI.
- 15:00 US Existing Home Sales. Exp. 5.09M.
- 15:00 US Richmond Manufacturing Index. Exp. 4 points.
- 18:00 ECB President Draghi Speaks.
For more events and lines, see the Euro to dollar forecast
- Additional Greek Aid Approved: At a meeting on Monday in Brussels, the Eurogroup of Eurozone Finance Ministers approved the next installment of bailout funds for Greece, in the amount of 9.2 billion euros. This tranche is made up of EUR 7.2 billion in bonds, to recapitalize Greek banks, and EUR 2 billion in cash for government expenses. The decision boosted market sentiment, as the move was seen as a vote of confidence by the ECB in the ability of Greece to carry on with its economic restructuring program.
- Eurogroup looks to aid banks: The Eurogroup has commenced discussions on how to best utilize the European Stability Mechanism, the Eurozone’s emergency bailout fund. The Eurogroup is takinga close look at direct bank recapitalization, whereby banks would borrow directly from the ESM. This is intended to replace the process whereby governments simply borrow more funds to bolster their ailing banks. As with most major issues affecting the Eurozone, there are deep divisions on this issue. The front-line members who are being touted for further aid include Spain, Cyprus and Greece.
- Juncker Steps Down: Jean-Claude Juncker, who headed the Eurogroup of finance ministers for the past eight years, stepped down on Monday. Juncker, a staunch defender of the euro and of European unity, presided over the global financial crisis in 2008, and the more recently, the Eurozone debt crisis, which threatened to destroy the euro. He will be replaced by Jeroen Dijsselbloem, the finance minister of the Netherlands. There was considerable jockeying between France and Germany as to who would be Juncker’s successor, and Dijsselbloem was considered a compromise candidate. The new head will certainly have his work cut out for him in Brussels, as he only became the Dutch finance minister in November.
- US Manufacturing, Consumer Confidence numbers disappoint: The US continues to send out mixed messages in its economic releases, making it difficult to evaluate the extent of the US recovery. Housing and Employment numbers looked excellent, hitting multi-year highs. The good news, however, was tempered by manufacturing and consumer confidence data. The Philly Fed Manufacturing Index surprised the markets with a very sharp drop, and fell back into negative territory.Coming on the heels of the Empire Manufacturing Index, which also looked dismal, these indicators point to significant contraction in the US manufacturing sector, which is weighing on the fragile economic recovery. Last week wrapped up with Preliminary UoM Consumer Sentiment, which had its worst performance in a year. The indicator dropped to 71.3 points, well below the forecast of 75.1 points. Consumer spending and confidence is a critical component of economic growth, and these numbers will have to improve significantly if the US recovery is to gain traction.