Why Euro Looks Stuck Even as Fed Gears Up to Move

On a trade-weighted basis, the euro has actually risen since quantitative easing started in 2015
The Wall Street Journal

By RICHARD BARLEY
Aug. 30, 2016 7:36 a.m. ET
3 COMMENTS
Once upon a time, signs the Federal Reserve was gearing up to increase rates would have been big news for the euro. Policy divergence was a key focus for foreign-exchange traders. But times have changed.

True, the euro declined against the dollar in the wake of the Jackson Hole conference, but it was far from an extraordinary move. And the bigger picture is that at $1.117, the single currency is in the middle of a relatively narrow range that has held since February.

Brexit isn’t the most serious threat to the EU — the euro is

Updated by Timothy B. Lee on June 29, 2016, 10:10 a.m. ET

VOX

Central banks like the US Federal Reserve and the European Central Bank play a critical role in modern economies.

Money is an essential fuel for economic activity, and it’s the job of a central bank to supply enough to allow for robust economic growth. If they supply too much, they produce inflation. Producing too little can tip the economy into a recession — or make an existing recession worse than it would otherwise be.

If Sterling Goes Down on `Brexit,' It's Taking the Euro With It

 Eshe Nelson

 Manisha Jha

 Chiara Albanese

February 23, 2016 — 2:00 AM EET Updated on February 23, 2016 — 12:36 PM EET

Bloomberg

Britain’s referendum on its membership in the European Union isn’t just a threat to the pound. It’s raising currency-market risks across the continent.
While the pound led declines among major currencies on Monday with its biggest slide since 2010, the euro had the second-largest drop, weighed down by signs of slowing growth. The cost of options protecting against losses on Europe’s 19-nation currency also jumped. The U.K.’s potential exit may damage trade and encourage other members to renegotiate their relationship with the EU, signaling scope for further losses in the euro in the run-up to Britain’s June 23 referendum.

Exclusive: Iran wants euro payment for new and outstanding oil sales - source

Fri Feb 5, 2016 5:15pm EST

NEW DELHI | BY NIDHI VERMA

Reuters

Iran wants to recover tens of billions of dollars it is owed by India and other buyers of its oil in euros and is billing new crude sales in euros, too, looking to reduce its dependence on the U.S. dollar following last month's sanctions relief.

A source at state-owned National Iranian Oil Co (NIOC) told Reuters that Iran will charge in euros for its recently signed oil contracts with firms including French oil and gas major Total, Spanish refiner Cepsa and Litasco, the trading arm of Russia's Lukoil.

Euro to Bear Brunt of Yuan's Inclusion in Reserve-Currency Club

 Netty Idayu Ismail

 Lillian Chen

Bloombgerg

The euro’s worst year in a decade is looking even grimmer after the Chinese yuan’s inclusion in the International Monetary Fund’s basket of reserve currencies.

The 19-nation currency’s weighting in the IMF’s Special Drawing Rights basket will drop to 30.93 percent, from 37.4 percent, the organization said Monday. The yuan will join the dollar, euro, pound and yen in the SDR allocation from Oct. 1, 2016, at a 10.92 percent weighting.

The euro has tumbled 13 percent against the dollar this year, the most in a decade, and central banks have reduced the proportion of the currency in their reserves to the lowest since 2002. European Central Bank President Mario Draghi signaled on Oct. 22 that policy makers are open to boosting stimulus, after embarking on a 1.1 trillion-euro ($1.2 trillion) asset-purchase program in March.

Finland’s Problem Isn’t the Euro

Despite modest debt and a competitive economy, the Nordic country is on course for a fourth year of recession, but don’t blame the common currency

The Wall Street Journal

By SIMON NIXON

Nov. 25, 2015 5:30 p.m. ET

8 COMMENTS

Which has been the worst performing economy in Europe this year, excluding Greece? The surprising answer is Finland. In the third quarter of this year, Finland’s economy contracted by 0.6%, putting it on course for a possible fourth consecutive year of recession. Since 2008, its output has shrunk by 6%, faring only slightly better than Italy’s roughly 8% decline over the same period.

A disagreement in Europe

The euro crisis was not a government-debt crisis

Nov 23rd 2015, 9:43 BY R.A. | LONDON

The Economist

THE euro-zone crisis has transitioned from an acute phase to a chronic one. At just this moment the fear that market panic might force one or several economies out of the single currency is low. Yet few analysts believe the euro zone has solved its fundamental problems. In a piece published at Vox EU last week, a cadre of prominent economists made the very sensible point that unless euro-area leaders can agree on the fundamental causes of the crisis, they will struggle to craft long-run fixes. The authors set out their view of the crisis, in hopes that it will prove a foundation for consensus building.

Finnish parliament will debate next year leaving euro zone

Mon Nov 16, 2015 7:25am EST Related: WORLD

HELSINKI | BY JUSSI ROSENDAHL

Reuters

Finland's parliament will debate next year whether to quit the euro, a senior parliamentary official said on Monday, in a move unlikely to end membership of the single currency but which highlights Finns' dissatisfaction with their country's economic performance.

The decision follows a citizens' petition which has raised the necessary 50,000 signatures under Finnish rules to force such a debate, probably the first such initiative in any country of the 19-member euro zone.

Euro Eyes Parity Once More

Bloomberg

Vassilis Karamanis

Following a failed attempt at parity earlier this year, the euro may be set to make a more convincing foray at 1.0000 to the U.S. dollar, as a crucial driver for further weakness in the common currency is now on a substantially different path, Bloomberg strategist Vassilis Karamanis writes.

Euro Falls Against Dollar

ECB’s Nowotny suggests officials should use more policy instruments to raise competitiveness

The Wall Street Journal

By IRA IOSEBASHVILI

Oct. 15, 2015 2:14 p.m. ET

0 COMMENTS

The euro fell against the dollar Thursday, after a member of the European Central Bank suggested officials should use more policy instruments to raise the region’s competitiveness.

The euro was recently down 0.7% at $1.1392, giving back most of the previous day’s gains. The Wall Street Journal Dollar Index, which gauges the buck against a basket of 16 currencies, was unchanged at 86.62.

What Draghi Said on QE, Market Volatility, Greece

 Deborah Hyde

September 4, 2015 — 11:19 AM EEST

Bloomberg

Mario Draghi addressed questions on recent market volatility and scope for further ECB action after the central bank downgraded growth and inflation forecasts and raised the limit of a country’s debt it can buy citing downside risks to the euro-area economy.

Here's the checklist of what Draghi said at yesterday's press conference:

Inflation

HICP rates will remain very low in the near term, may even turn negative toward end of year also due to base effects of oil; impact will be “transitory” due to oil.

Inflation likely to pick up during 2016 and 2017 although more slowly than anticipated thus far.

Downside risks to September projections remain.

The euro area's uninspiring recovery

Sep 2nd 2015, 13:29 BY P.W. | LONDON

Economist

EARLIER this year, a genuine revival in the euro area appeared to be under way. European equity markets were buoyant and consumers had become more confident. The recovery, which had been faltering and feeble since the spring of 2013, looked set to accelerate. That bout of optimism has proved fleeting and there is now increasing doubt about whether the euro area can pull itself out of a rut of low inflation and sluggish growth. The European Central Bank (ECB) is not expected to act on September 3rd when its governing council meets. But it may well indicate a preparedness to provide more stimulus, if necessary.

Turmoil in China, weak inflation may open door for more stimulus from European Central Bank

http://www.usnews.com/news/business/articles/2015/09/01/wobbly-euro-economy-may-get-bigger-push-from-central-bank

By DAVID McHUGH, AP Business Writer

FRANKFURT, Germany (AP) — When is a trillion euros not enough? Could be soon, in Europe's shaky economy.

Analysts are already talking about when and how the European Central Bank might extend its 1.1 trillion-euro ($1.2 trillion) stimulus program that has been running for the past six months in an attempt to boost the modest recovery in the 19 countries that use the euro.

Euro, bond yields tumble as ECB hints at faster pre-summer buying

LONDON | BY MARC JONES

Tue May 19, 2015 7:27am EDT

Reuters

The euro tumbled on Tuesday and the region's stocks and bonds jumped after the European Central Bank signalled it would speed up its 1 trillion euro bond-buying programme for the next two months ahead of an expected summer lull.

World stocks were already testing all-time highs after another jump in Chinese stocks and a record close on Wall Street, and European markets shot up after top ECB policymaker Benoit Coeure talked of adjusting the bank's buying programme.

Euro Pares Gains, Stocks Rise

Germany’s DAX, which is stocked with exporters, jumped as the euro slipped from its high

By JOSIE COX

Updated May 14, 2015 1:18 p.m. ET

The Wall Street Journal

The euro pared gains against the dollar in late trade Thursday, sparking a stock rally led by Germany’s DAX index, which is packed with exporters.

The Stoxx Europe 600 ended the day 0.6% higher, led by a more than 1.8% gain on Germany’s DAX and a 1.4% gain on France’s CAC.

The euro weakened slightly after European Central Bank President Mario Draghi said that the ECB’s vast stimulus efforts will remain in place “as long as needed” until officials are confident they will meet their inflation objective on a sustained basis. The ECB’s bond-buying program has sent the euro sharply lower since it was first announced in January.

The euro was trading around 0.2% higher at $1.138, but was down from $1.145 earlier in the day—its highest level since late February.

A stronger euro is generally seen as bad for companies in the eurozone that generate a big chunk of their revenue overseas. The dollar enjoyed a stellar start to the year but has reversed direction in recent weeks amid a number of disappointing U.S. data releases.

“There is no denying the performance of the U.S. economy is falling well short of expectations” and is pushing back bets for when the Federal Reservewill raise rates, which is weighing on the dollar, said Lee Hardman, an economist at Bank of Tokyo-Mitsubishi UFJ.

BNP Paribas strategists also said the dollar weakness was likely to continue in the near term but added they broadly expect the buck to recover as the Fed gets closer to raising rates.

Eurozone bond markets were mostly stable Thursday after a selloff in recent weeks.

The yield on the German 10-year government bond, or Bund, edged slightly lower on the day to trade at about 0.70%, having risen from its all-time low of 0.05% in late April. Yields rise as bond prices fall.

“The bond rout isn’t going away for the summer and will weigh on all asset classes,” said Nick Lawson, a senior trader at Deutsche Bank.

Peter Chatwell, a rates strategist at Mizuho, said investors were unlikely to start buying bonds again in a big way until the current patch of volatility subsides. “They are on the sidelines waiting for the market to calm down,” he said.

In commodity markets, Brent crude was around 1% lower in late trade at $66.65 a barrel. Gold was up 0.3% at $1,222 a troy ounce.

Write to Josie Cox at josie.cox@wsj.com

Asia stocks, euro falter as Greek crisis saps confidence

Tue May 12, 2015 1:24am EDT Related: GREECE

TOKYO | BY SHINICHI SAOSHIRO

Reuters

Asian stocks were mostly lower and the euro sagged on Tuesday as barely perctible progress on talks between debt-strapped Greece and its creditors kept investors edgy.

Spreadbetters expected jitters over Greece to continue weighing on Europe, forecasting a slightly lower open for Britain's FTSE, Germany's DAX and France's CAC.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent. Decliners included shares in South Korea, Hong Kong, Malaysia and Thailand, while Chinese equities bucked the trend and rose modestly.

As the Euro Slides, a Coin Meets Its Waterloo

By DANNY HAKIMMAY 4, 2015

New York Times

BRUSSELS — Here at the Belgian Royal Mint, machines called giraffes spit out as many as 850 euros a minute.

At times during the summer of 2008, that many shiny coins would have been worth $1,360. Now it is just under $950, a symptom of Europe’s inability to navigate through crisis. Even as the region’s outlook improves ever so slightly, the currency just cannot shake the specter of moribund growth and the troubles of Greece.

But at the mint, there were more immediate concerns during a recent visit. Like the Battle of Waterloo.

Delight or Dread as Euro Falls

By DAVID JOLLYMARCH 11, 2015

 The New York Times

PARIS — For Hervé Montjotin, chief executive of the French trucking and logistics group Norbert Dentressangle, the euro’s steep plunge against the dollar could not be more welcome.

In the months since his company bought Jacobson, an American contract logistics company, the currency’s decline — down about 23 percent over the past year — has meant a windfall when dollars earned in the United States are translated back into euros.

“We bought a profitable business, and that business now makes 20 percent more in euros than when we got it,” he said. “We’ve either been very skilled or very lucky.”

Dollar Hits Fresh Highs Against Euro, Yen

Traders say Greenback Being Bought Ahead of Next Week’s FOMC meeting

By HIROYUKI KACHI

Updated March 10, 2015 3:14 a.m. ET

The Wall Street Journal

The dollar set fresh multiyear highs against the euro and the yen in Asian trade Tuesday, as market participants bet on the continuing divergence in monetary and economic conditions in the U.S., the eurozone and Japan.

The common currency fell to $1.0785—its lowest since Sept. 3, 2003—in midday trading before stabilizing at $1.0796 midway through afternoon trading.

Grexit for the Good of the Eurozone

Posted: 02/23/2015 8:28 pm EST Updated: 02/23/2015 8:28 pm EST

Russell Green Become a fan

Will Clayton Fellow for International Economics at Rice University's Baker Institute for Public Policy

http://www.huffingtonpost.com/russell-green/grexit-for-the-good-of-th_b_6737680.html

If the Greeks leave the Eurozone, it would be awful. Both Greece and the remainder of the euro area would experience damaging volatility and uncertainty. But "Grexit" does not have to be all bad. In fact, if the Eurozone countries use the crisis to push through long-needed reforms, they could wind up in a much stronger position in the long run.