Dollar Gains Against Euro After US Data And ECB Comments


On Monday, the United States dollar rose against the euro after it was signaled by the European Central Bank President Mario Draghi that the bank could ease monetary policy further, while strong U.S. retail sales data also boosted the dollar against the yen.

Dollar Gains Against Euro After US Data And ECB Comments

Draghi said in Washington that “a further strengthening of the exchange rate would require further stimulus.” Bank of France Chief Christian Noyer remarked, “The stronger the euro is, the more accommodative policy is needed.”

“A number of ECB officials are talking in more detail about unorthodox policies,” said Alan Ruskin, global head of G10 currency strategy at Deutsche Bank in New York. “All of that is raising expectations that we’re not that far from action.”

The statements marked the strongest signal provided by ECB yet that it could act for heading off further gains in the single currency. The single currency retreated around half a percent from close to 2014 highs against the U.S. dollar, but was still up from its low for the year of $1.3476, which it touched on February 3.

The dollar hit session highs against the euro, Japanese yen, and Swiss franc after the Commerce Department said retail sales increased 1.1 percent in March. The euro was last down 0.48 percent against the dollar at $1.3817. The U.S. dollar index .DXY, which measures the dollar against six major currencies, was last up 0.36 percent.

Bennenbroek of Wells Fargo said, “The longer the situation remains unsettled, the greater the chance that there could be some further sanctions that could impact the economy.” The potential of the United States and European Union to impose further sanctions against Russia has weighed on the ruble, he added.

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Onus On Europe And China After US Makes Recovery


Top financial policymakers of the world will descend on Washington with a debate on mind as to what is required to be performed for galvanizing economic growth.

Onus On Europe And China After US Makes Recovery

Europe has been urged by the International Monetary Fund to do more ahead of the IMF April 11-13 Spring gathering. IMF’s suggestion irked European Central Bank chief Mario Draghi who suggested the Fund should put out a wish list for the United States just before the next Federal Reserve policy meeting. However, the US is now firmly in recovery mode that was revealed by its monthly jobs report that showed hiring was robust in March.

Investors for China have been on the edge for a while after liquidity crunches and a first-ever domestic bond default. However, they have taken out some comfort from the fact that the worse things get the more likely it is the Chinese government will stimulate the economy.

“The U.S. economy is set to bounce back from the drags from weather and destocking. And China’s extremely weak start to the year should also give way to something a little better, as modest stimulus falls into place,” said Dominic Wilson, chief markets economist at Goldman.

The euro zone needs more monetary easing including via unconventional measures, said IMF head Christine Lagarde and added she is likely to be left waiting with inflation likely to pick up in April for technical reasons.

“Assuming the April inflation rate comes in higher, the discussion about quantitative easing (money printing to buy assets) is likely to subside,” said Michael Schubert, economist at Commerzbank in Frankfurt.

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German Court May Term Euro Bailout Scheme Legal


The Constitutional court of Germany is expected to confirm that it considers the bailout fund for eurozone legal as long as parliament has sufficient oversight.

German Court May Term Euro Bailout Scheme Legal

The 700 billion euro ($975 billion) European Stability Mechanism would not be ruled unlawful, according to Germany’s Finance Minister Wolfgang Schaeuble. Experts believe that it is unlikely the court will contradict its own preliminary ruling.

At the height of the debt crisis, the Karlsruhe court’s initial finding in 2012 was that the eurozone bailout fund complied with German law provided the Bundestag lower house had powers to veto it and may ensure limited liability for German taxpayers.

Gunnar Beck, a Eurosceptic law expert at London University, said the verdict could include hints about the legality of the euro zone’s flagship anti-crisis measure – the European Central Bank’s bond-buying program called Outright Monetary Transactions (OMT). Beck remarked if the ESM ruling restates that Germany’s ESM liability must not exceed 190 billion euros, it “might reinforce its assessment that the OMT is unlawful because it entails further budgetary risks for Germany”.

Economist Christian Schulz at Berenberg bank said the court was “definitely not going to say anything new on OMT”.

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S&P Ends At Record Despite Ukraine Worries


On February 27, the S&P 500 ended at another record close. However, it was well off the day’s highs as concerns about tensions in Ukraine prompted investors to take profits ahead of the weekend. All three major indexes closed out with strong gains in February.

S&P Ends At Record Despite Ukraine Worries

The Dow Jones Industrial Average was the best of all and scored its best monthly percentage gain since January 2013, while the S&P 500 had its best month since October.

The S&P managed to hit an intraday record for a second time in the week as consumer confidence and other data bucked the current trends of weaker economic reports. However, indexes started to turn negative as the acting President of Ukraine accused Russia of open aggression and remarked that Moscow was following a similar scenario to the one before it went to war with Georgia in 2008.

“There’s chatter about Russia’s (involvement) in the Ukraine, and that’s getting people all jittery,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. “It’s sell first, and ask questions later on a Friday afternoon. You don’t know what’s going to happen over the weekend, so people are going to lock in profits.”

The Dow Jones industrial average .DJI rose 49.06 points or 0.3 percent, to 16,321.71, while the S&P 500 .SPX gained 5.16 points or 0.28 percent, to 1,859.45, a record close. The S&P 500 hit an intraday record of 1,867.92. The Nasdaq Composite .IXIC dropped 10.814 points or 0.25 percent, to 4,308.119.

For February, the Dow rose 4 percent, the S&P 500 gained 4.3 percent and the Nasdaq advanced 5 percent. For the week, the Dow was up 1.4 percent, the S&P 500 was up 1.3 percent and the Nasdaq was up 1 percent.

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ECB Ready To Take Decisive Actions, Says Coeure


Benoit Coeure, executive board member of the European Central Bank (ECB), has remarked that the ECB is fully ready to “decisive action if required” if inflation risk becoming entrenched below its target of just under 2 percent.

ECB Ready To Take Decisive Actions, Says Coeure

The European Central Bank left interest rates unchanged at record lows earlier this month. This was despite inflation slowing to 0.7 percent in January that was far below the bank’s target of just below 2 percent. The central bank has decided to wait until its meeting in March for assessing more information on the economic picture before a decision on whether to take fresh policy action is taken.

“The Governing Council’s assumption is that the rate of inflation will gradually increase towards our target of close to, but below, 2 percent,” Coeure said. “We are however closer to the area where inflation expectations could be altered and create downside risks to price stability.”

“So we are very vigilant regarding risks to our baseline scenario, which envisages inflation slowly going back to 2 percent over the medium term,” he added. “We remain firmly determined to maintain the high degree of monetary accommodation that is appropriate for the euro area economy, and will not hesitate to take further decisive action if required.”

“Over the next weeks and months, if risks to our main scenario materialize, we will be ready to act, consistent with our forward guidance.”

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Nissan Q3 Net Profits Beats Estimates


On Monday, Nissan Motor Co (7201.T) beat analyst estimates by posting a 56.8 percent rise in quarterly net profit. The results of Nissan were helped by a weaker yen and improving sales in China, its biggest market.

Nissan Q3 Net Profits Beats Estimates

Nissan, Japan’s second-biggest automaker by global sales volume after Toyota Motor Corp (7203.T), booked 84.3 billion yen ($824.73 million) profit for October-December, compared with the mean estimate of 57.1 billion yen in a Thomson Reuters I/B/E/S poll of seven analysts. The company was able to keep its profit outlook for the full year to March-end at 355 billion yen compared with analysts’ 364.2 billion yen estimate. Operating profit of the company for the nine months to December was 4.1 percent compared with 9.7 percent at Toyota and 6.6 percent at Honda Motor Co (7267.T). Shares of Nissan closed up 0.1 percent before the earnings release compared with a 1.8 percent rise in the benchmark index.

Nissan is trying to improve its operating profit margin as well as global market share to 8 percent each by the year ending March 2017.

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