ECB Leaves Key Refi Rate Unchanged At Record Low

The European Central Bank on Wednesday decided to hold fire on rates, as any tightening will be premature and dampen early signs of recovery in the region.

The 23-member rate-setting council left the main refinancing rate unchanged at a record low 0.50 percent for the fifth month. The previous change in rate was in May, when it was lowered by a quarter point.

The bank held the marginal lending facility rate at 1 percent and the deposit rate was also left unchanged at zero.

The governing council gathered in Paris instead of its usual venue in Frankfurt and the meeting was brought forward to Wednesday as it is a public holiday in Germany on Thursday.

ECB Chief Draghi is set to hold the post meeting press conference at 8.30 am ET.

Although ECB Chief Mario Draghi recently hinted at long-term refinancing operation and measures needed to address rising money market rates, economists see no major announcement later today. The markets expects LTRO only later this year.

Given the doubts over the effectiveness of more LTROs though, other new measures to stimulate lending may eventually be needed to sustain the recovery, said Ben May, an economist at Capital Economics.

Money market rates have shown signs of rising recently on talks of Federal Reserve's "tapering" of bond purchases.

Elsewhere, Italian Prime Minister Enrico Letta faces a confidence vote today. Italy's political instability and its huge debt burden will weigh on the nation's borrowing costs and will once again trigger talks of ECB's bond buying program.

Last month, the ECB upgraded its 2013 economic outlook for the euro area, to show a 0.4 percent contraction, compared to the 0.6 percent GDP decline estimated in June. However, the growth projection for 2014 was cut to 1 percent from 1.1 percent.

Inflationary pressure remained subdued in the 17-nation bloc, with inflation falling to the lowest since early 2010 in September. Inflation is forecast to average 1.5 percent this year.

The sharp decline in lending to private sector together with low inflation amid nascent recovery is expected to prompt the central bank to keep its interest rates low for an extended period.

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2013-10-02 17:42

Euro Down Against Dollar, Pound As ECB Stands Pat

The euro was trading lower against the dollar and the pound on Thursday after the European Central Bank decided to hold its interest rate unchanged at a record of 0.50 percent.

The European Central Bank left its interest rates unchanged for the third consecutive month in August amid some improvement in economic indicators, which is in line with its expectation of a gradual recovery later this year.

The Governing Council led by ECB President Mario Draghi left the main refinancing rate steady at a record low 0.50 percent as expected. The rate was slashed by quarter-basis point in May, the first rate cut in nine months.

The bank also held the marginal lending facility rate at 1 percent, following a 50 basis points cut in May. The zero deposit rate was also left unchanged.

At the same time, the Eurozone manufacturing sector expanded for the first time since July 2011, survey data from Markit Economics showed today. The Purchasing Managers' Index rose to 50.3 in July, from 48.8 in June and above the flash estimate of 50.1.

As widely expected, the Monetary Policy Committee headed by Mark Carney retained the asset purchase facility at GBP 375 billion and interest rate at a record low 0.50 percent.

In the U.K., the seasonally adjusted Markit/Chartered Institute of Purchasing & Supply Purchasing Manager's Index rose more-than-expected to 54.6 in July from a revised reading of 52.9 in June. The index reading was forecast to improve to 52.8 from June's originally estimated level of 52.5.

The U.S. Federal Reserve on Wednesday kept its ultra-loose monetary policy intact, voicing concerns over the recent rise in mortgage rates and low inflation. There was no language in the Fed's post-statement meeting that would suggest that the $85 billion a month asset-purchase program may be scaled back in the next few months.

The official purchasing managers' index (PMI) in China rose to 50.3 in July from 50.1 in the previous month, while a separate HSBC PMI survey showed factory activity shrank for a third straight month to its lowest level in 11 months. The headline PMI index fell to 47.7 from 48.2 in June.

The U.S. weekly jobless claims report showed that initial jobless claims fell to 326,000, a decrease of 19,000 from the previous week's revised figure of 345,000. The decrease surprised economists, who had expected jobless claims to edge up to 345,000 from the 343,000 originally reported for the previous week.

The euro slipped to a 2-day low of 0.8678 against the pound around 8:30 am ET, pulling back from Asian session's fresh 4-month high of 0.8768. The near-term support for the euro is seen around the 0.8660 level, at which the 10-day EMA lies in the currency cross.

The euro dropped below the key 1.32 level against the US dollar, falling to a weekly low of 1.3192 by 8:30 am ET. The euro-greenback pair is presently hovering around the 1.32 level with 1.3165 seen as the next likely support level.

The common currency held steady against the Swiss franc and the yen after the ECB rate decision. The euro-franc pair was trading in a range of 1.2310 and 1.2330 and the euro-yen pair was trading between 130.80 and 130.40.

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2013-08-01 17:47

Slovenia's Unemployment Rate Drops To 13% In May

Slovenia's unemployment rate decreased from the previous month in June, data released by the Statistical Office of the Republic of Slovenia showed Tuesday.

The unemployment rate decreased to 13 percent in May from 13.3 percent in April. In May 2013, the jobless rate was 11.7 percent. Since February this year, the unemployment rate decreased by 0.6 percentage points.

There were 118,576 unemployed persons in Slovenia at the end of May, which was lower than 121,332 recorded in the previous month.

The jobless rate among youth, aged between 15 and 24, was 28.3 percent in May, lower than 29.1 percent recorded a month earlier.

At the same time, the number of persons in employment increased by around 2,400 month-on-month to 795,402 in May, continuing the trend began at the beginning of the year. The upturn was led by a notable rise in headcounts in the construction sector, data showed.

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2013-07-16 19:00

Japan Jobless Rate Flat In April

Unemployment in Japan remained flat in April.

Japan's Ministry of Finance reported Friday that the national jobless rate was 4.1 percent, unchanged from March.

The data matched the expectations of most economists.

the labor force participation rate improved in April, rising to 59.6 percent compared to the March reading of 58.9 percent.

The job-to-applicant ratio also improved slightly, moving to 0.89 from the March reading of 0.86.

The Ministry also announced that Household Spending in Japan increased 1.5 percent in April, compared to the March rise of 5.2 percent.

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2013-05-31 05:58

Chinese Yuan Spikes Up To More Than 3-month High Against U.S. Dollar

The Chinese yuan strengthened against the U.S. dollar in late Asian deals on Wednesday, as the People's Bank of China set the currency's reference rate at the highest level since January 15.

The yuan reached 6.2123 per dollar, the level not seen since December 14, 2012. The yuan thus appreciated 0.13 percent against the greenback from yesterday's close of 6.2202. If the yuan advances further, it will break last year's peak of 6.2087.

The PBOC set today's central parity rate for the yuan at 6.2716 per dollar, up from Tuesday's daily reference rate of 6.2758. The Chinese central bank sets the central parity rate every morning and allows the currency to fluctuate up to 1 % from the level.

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2013-03-20 10:32

New Zealand Dollar Overvalued, IMF Says

The New Zealand dollar is currently stronger than would be consistent with medium term fundamentals and "appears to be overvalued," the International Monetary Fund said in a report on Monday.

The gap between domestic and foreign interest rates, and more recently, increased portfolio flows into New Zealand are contributing to the current level of the exchange rate, the Washington-based lender said in the report.

IMF noted that if global monetary policy were to become less stimulatory, the exchange rate would likely depreciate over time. The government's deficit reduction plan also eases upward pressure on the exchange rate, it said.

The report also noted that economic growth may accelerate this year with an increase in construction activity offsetting headwinds from budget deficit reduction, the strong dollar, and the possibly protracted impact of the severe drought.

IMF also noted that the government's fiscal consolidation path strikes a balance between the need to limit both public and external debt increases while containing any adverse impact on economic growth.

Finance Minister Bill English welcomed the IMF statement and said the assessment reflects "the balanced and pragmatic approach the Government had taken with its economic program over the past four years."

IMF expects underlying inflation to increase but remain modest. Persistently high exchange rate is dampening tradable price inflation and wage pressures remains contained, the Fund said.

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2013-03-19 12:42

Spanish Unemployment Rate Hits Record High Of 26.02%

Spain's jobless rate increased to a record high in the fourth quarter, leaving nearly six million people unemployed as the government engaged in sharp spending cuts after the economy plunged deeper into recession, latest data showed on Thursday.

The unemployment rate increased to 26.02 percent in the fourth quarter from 25.01 percent in the preceding three months, statistical office INE said. The rate was almost in line with the consensus forecast for 26 percent.

The latest figure is the highest in the history of modern Spain, after the death of the dictator Francisco Franco in 1975. The current government led by Prime Minister Mariano Rajoy came to power late 2011.

The jobless rate among those under the age of 25 years also jumped to a record 55.13 percent in the fourth quarter from 52.34 percent in the previous three months. A year ago, the figure was 48.56 percent.

There were around 5.97 million unemployed persons in the country at the end of 2012, higher by 187,300 compared to the third quarter. From the fourth quarter of 2011, the number of jobless persons increased by 13.12 percent.

Meanwhile, the number of employed persons decreased 2.1 percent sequentially to 16.96 million in the three months ended December. Year-on-year, employment dropped by 4.78 percent.

The Spanish economy deteriorated severely in recent times after the country's once-booming real estate sector bust in 2008, leaving millions of workers out of labor.

Data from the government this week showed residential property prices fell 10 percent in the fourth quarter compared to last year. Separate data showed the home sales in Spain decreased at a marked annual rate of 6.1 percent in November.

In its latest quarterly bulletin, released yesterday, the Bank of Spain said Spain's recession likely deepened in the fourth quarter, with gross domestic product (GDP) falling for the fifth consecutive quarter.

According to the bank, GDP is estimated to have dropped at a faster rate of 0.6 percent sequentially in the fourth quarter than 0.3 percent in the third quarter, signaling a worsening of the ongoing recession.

Year-on-year, the economy contracted 1.7 percent during in the fourth quarter, after shrinking 1.6 percent in the third quarter. In the whole of 2012, GDP has declined 1.3 percent.

The Spanish economy may stop contracting in the second half of this year, but the balance of risks seems tilted towards a more protracted recession and a real return to growth may have to wait until next year, ING Bank economist Martin van Vliet said yesterday.

"The recent fall in Spanish government bond yields has been impressive," the economist noted. "But it has not yet been accompanied by meaningful signs of improvement in Spain's real economy."

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2013-01-24 16:42

U.K. Inflation Steady At 2.7%

U.K. annual inflation held steady in November at the highest level since May on increases in food and energy bills, official data showed Tuesday.

Consumer price inflation stabilized at 2.7 percent in November, figures from the Office for National Statistics revealed Tuesday. Inflation was at a 34-month low of 2.2 percent in September.

The November rate came in line with economists' expectations, but continues to hover above the 2 percent target. The highest upward impact on inflation was from food prices and utility charges, while fuel prices exerted downward pressure.

Core inflation that excludes energy, food, alcoholic beverages and tobacco, also remained unchanged at 2.6 percent in November. The rate was forecast to rise marginally to 2.7 percent.

As inflation is set to stay between 2.5 percent and 3 percent for the best part of the next year due to increases in utility and food prices, the squeeze on households' spending power looks likely to persist throughout 2013, said Samuel Tombs at Capital Economics. Nonetheless, inflation will eventually fall to a very low rate.

IHS Global Insight's Chief UK economist Howard Archer said he expects consumer price inflation to fall to 2.2 percent by the end of 2013 and finally below 2 percent in 2014.

Month-on-month, consumer prices increased at a pace of 0.2 percent, in line with forecast, but slower than a 0.5 percent rise in October, data showed.

Retail price inflation, at the same time, slowed to 3 percent from 3.2 percent in October. Mortgage interest payments had a downward impact on the annual change.

Excluding mortgage interest payments, retail prices climbed 2.9 percent annually, down from 3.1 percent a month ago. Economists had forecast the annual rate to remain at 3.1 percent.

In a separate communique, the statistical office said factory-gate inflation slowed in November. Output price inflation fell to 2.2 percent in November from 2.6 percent a month ago. It was forecast to ease to 2.5 percent.

Meanwhile, core output price inflation that strips out food, beverages, tobacco and petroleum, held steady at 1.4 percent.

Annually, input prices slipped 0.3 percent in November after staying flat in October. On a monthly basis, the input price index edged up 0.1 percent, the same rate as seen in September and October.

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2012-12-18 16:42

Eurozone Downturn Slows On German Recovery

The downturn in Eurozone slowed in December as the German private sector returned to growth, while contractions in the rest of the region remain worrying, survey results from Markit Economics showed Friday.

The composite Purchasing Managers' Index rose to a nine-month high of 47.3 in December from 46.5 in November. A reading below 50 suggests contraction.

"The survey is still consistent with euro area GDP falling for the third successive quarter," said Chris Williamson, chief economist at Markit.

The flash services PMI climbed more-than-expected to 47.8 from 46.7 in November. The index was forecast to rise to 47 in December. The manufacturing PMI, at the same time, edged up to 46.3 from 46.2 last month. The expected reading was 46.6.

Output continued to fall in manufacturing and services, though in both cases the rate of decline showed signs of moderating. The pace of decline of new business moderated, but the easing was only marginal.

The rate of job losses, at the same time, slowed in December, hitting the lowest since August. A stabilization of headcounts in Germany contrasted with falling employment in France and elsewhere across the Eurozone on average.

In the face of broad-based weakness in demand, inflationary pressures remained muted in December. Input prices rose at a slightly stronger rate, but the rate of increase has shown little overall change over the past four months.

Final data from Eurozone confirmed an easing in inflation to 2.2 percent in November. The decrease largely reflected a slowdown in energy price growth to 5.7 percent from 8 percent.

Germany's private sector expanded after contracting for eight straight months, underpinned by service sector recovery. The flash composite output index came in at 50.5 in December, an improvement on November's 49.2.

The German services PMI rose to 52.1 from 49.7 in November. Economists had forecast the index to rise to no-change level of 50. On the other hand, the manufacturing PMI fell unexpectedly to 46.3 from 46.8 in the prior month.

Meanwhile, the Ifo institute on Thursday trimmed its 2013 GDP growth forecast to 0.7 percent from 1.3 percent. The think tank forecast the economy to contract in the fourth quarter of 2012, before staging a modest recovery in 2013.

Data today showed that the downturn in the French private sector output continued in December, but the rate of contraction slowed. The flash composite output index rose to 45, a 4-month high, from 44.3 in November.

The French services PMI climbed to 46, in line with expectations, from 45.8 a month ago. Likewise, the manufacturing PMI rose to 44.6 in December from 44.5 in November. The manufacturing PMI stayed slightly below the consensus forecast of 44.9.

Ernst & Young on Thursday said the Eurozone will shrink 0.2 percent next year. The firm expects euro area to enter 2013 with a brighter outlook than twelve months ago.

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2012-12-14 16:42