March 1 2013

In the broadcast today: EUR, GBP and JPY Outlook ahead of ECB, BOE & BOJ Meetings. Ahead of the upcoming European Central Bank, the Bank of England and the Bank of Japan meetings, we explore what could be the next moves of these major central banks and examine the outlook for  the EUR, the GBP and the JPY, we list the Top 10 spotlight economic events that will move the markets next week, we examine the consensus forecasts for the upcoming economic data, we analyze the tests of important support levels in the EUR/USD and the GBP/USD currency pairs, we take a look at the renewed strength of the USD vs JPY, we highlight the market’s reaction to the Japanese CPI, the Euro-zone Manufacturing PMI and Unemployment Rate, the U.K. Manufacturing PMI, and the U.S. ISM Manufacturing Index, we discuss new forecasts from Bank of New York-Mellon, Bank of Tokyo-Mitsubishi and Citigroup, and prepare for the trading session ahead.

Live Broadcast from 9:00 am to 10:00 am, Eastern Time, Monday – Friday.

Listen to the archived Broadcasts


Euro falls below $1.30 to 2013 low on record high unemployment and another month of contraction in the region’s manufacturing sector. Euro jobless rate now at 11.9%. Grillo attacks Bersani again. US manufacturing expands more than expected…

Powered by article titled “Eurozone crisis live: Record unemployment and shrinking manufacturing drive euro down” was written by Graeme Wearden, for on Friday 1st March 2013 15.48 UTC

3.39pm GMT

US manufacturing sector beats foecasts

America’s manufacturing sector has, once again, outperformed other nations.

The US ISM index jumped to 54.2 in February from 53.1 in January, which means that growth is accelerating.

That’s the fastest rate in 20 months, and makes the contractions in the UK (PMI of 49.7) and the eurozone (PMI of 47.9) look even worse.

Amna Asaf of Capital Economics commented:

US manufacturers were undeterred by the fragile recovery in overseas manufacturing activity, for now at least.

Updated at 3.48pm GMT

3.08pm GMT

Exclusive: M5S’s Casaleggio on the party’s future

Gianroberto Casaleggio, joint founder of the Italian Five Star Movement, has given an exclusive interview to the Guardian in which he states there is no chance of the group joining the country’s next government.

But… speaking to John Hooper, our Southern Europe editor, Casaleggio also suggests that the party could provide limited support for a minority government, on policies which M5S agreed with.

Casaleggio, the man who helped mastermind the movement’s rapid growth using the power of the Internet, explained:

If a government is put together, formed by other parties, the Five Star Movement will vote for everything that forms an integral part of its programme.

Significantly, Casaleggio also says the party will remain on the sidelines as president Napolitano tries to build a coalition over the coming days. That, John says, is a new, tougher line from M5S.

Here’s the story: M5S says it will not help form Italian government

Definitely worth a read, as Casaleggio opens up about the party’s long-term ambitions, and about how digital democracy will fundamentally reshape politics around the globe.

What is happening in Italy is just the beginning of a much more radical change. It’s a change that is going to touch all democracies.

2.42pm GMT

Pound falls below $1.50

The pound just slipped below the $1.50 mark for the first time since early July 2010, a fall of 1.5 cents against the US dollar today.

Sterling has been suffering since this morning’s weak manufacturing data was released, fueling fears of a triple-dip recession.

Kit Juckes of Societe Generale reckons the pound could soon be as low as $1.40.

Since, as I’ve argued plenty of times before, a weaker pound won’t really help UK exports (of planes, lawyers and investment bankers) as much as they hurt consumes’ real incomes, the UK’s de facto weak pound policy won’t work well, so will continue for a long time.

There is no other path.

1.42pm GMT

Italy’s president has challenged the German government to do more to help the eurozone out of its economic crisis, on the final day of his trip to Germany.

President Giorgio Napolitano told an audience in Berlin that Germany had shown leadership in the crisis. However, he then appeared to chide its government for not stimulating its domestic economy more vigorously to help its neighbours:

Napolitano said:

I don’t want to simplify the problem, but it would be reasonable to expect an expansive impulse from Germany to contribute to a real, not just proclaimed, recovery in growth and employment in Europe.

(quote via Reuters).

Today’s manufacturing data showed that Germany’s factories are enjoying rising output, while most other countries are still suffering the impact of the euro recession.

The Italian president also dampened speculation that the election could be rerun soon, telling reporters that “I’m not interested in a new vote”, and that his successor (Napolitano’s term ends in May) is unlikely to want more instability either.

Napolitano’s trip had already been marred by the diplomatic spat after the SPD’s candidate for the chancellorship, Peer Steinbrück, over his comment that two clowns had won the election.

1.00pm GMT

Italy has missed its deficit reduction target for 2012 – but the good news is that it didn’t exceed the 3% target limit set by the European Commission.

Italy’s deficit came in at 3.0%, rather higher than Mario Monti’s most recent forecast of 2.6%. But it still low enough for the country to extract itself from the EC’s ‘excessive deficit’ procedure.

This pushed the total national debt to a new record high of 127% of GDP.

12.29pm GMT

Euro hits lowest level of 2013

The euro has fallen to its lowest level of 2013, following the latest record unemployment levels and weak manufacturing data.

The euro just dropped through the $1.30 mark for the first time since last December, to a low of $1.2987.

Traders are blaming fresh fears over the health of Europe’s economy, with eurozone jobless rate now at 11.9% (see 10.06am) and factory output falling sharply in Italy and France (see 9.32am)

The ongoing uncertainty over Italy, following Beppe Grillo’s latest attack on the centre-left (see 11.50am), isn’t helping the euro either.

12.16pm GMT

Economist Megan Greene suggests that the solution to the deadlock in Italy could be for Bersani to step down and be replaced by Matteo Renzi, who was defeated for the leadership of the centre-left late last year.

Renzi, mayor of Florence, had pledged to be loyal to Bersani – but Beppe Grillo’s repeated personal attacks on the Democratic Party leader are adding to the pressure for a change.

11.50am GMT

Grillo: hands off my senators!

Back to Italy, and Beppe Grillo has just tried to sink Pier Luigi Bersani’s efforts to become the prime minister of a minority government.

In a new blog post (see it here), Grillo accused Bersani and his Democratic Party of acting like “vulgar predators” by trying to persuade some his Five Star Movement’s new senators to work with him.

Grillo pointed out that everyone who stood as a M5S candidate had agreed not to “associate with other parties or coalitions or groups except for voting on shared points”.

Grillo declared that:

M5S, its elected officials, its activists, its voters are not for sale.

and added that Bersani does not realise he is “out of history”.

This looks like a blow to Bersani’s hopes of persuading president Napolitano that he can build a consensus with M5S (see 8.47am).

The stalemate continues…

Updated at 12.21pm GMT

10.54am GMT

Eurozone inflation drops below 2%

Inflation in the eurozone has fallen below the 2% mark, giving the European Central Bank some leeway to cut interest rates.

The consumer prices index dropped to 1.8% in February, from 2.0% in January. The ECB’s goal is to have the cost of living rising by a little below 2% per year – so there’s now more leeway for a rate cut…

10.42am GMT

Table: Latest jobless rates

And here’s each country’s unemployment rate (as that picture at 10.14am is a little blurry).

  • Eurozone: 11.9%
  • European Union: 10.8%
  • Belgium: 7.4%
  • Bulgaria: 12.%
  • Czech Republic: 7.0%
  • Denmark: 7.4%
  • Germany: 5.3%
  • Estonia 9.9%
  • Ireland: 14.7%
  • Greece: 27%
  • Spain: 26.2%
  • France: 10.6%
  • Italy: 11.7%
  • Cyprus: 14.7%
  • Latvia: 14.4%
  • Lithuania: 13.3%
  • Luxembourg: 5.3%
  • Hungary: 11.1%
  • Malta: 7.0%
  • Netherlands: 6.0%
  • Austria: 4.9%
  • Poland: 10.6%
  • Romania: 6.6%
  • Slovenia: 10.2%
  • Slovakia: 14.9%
  • Finland: 7.9%
  • Sweden: 8.0%
  • UK: 7.7%

10.31am GMT

10.14am GMT

Jobless rates across the EU

As usual, the highest jobless rates are being suffered in Spain (26.2%) and Greece (27%).

Austria (4.9%) and Denmark (5.3%) enjoy the lowest unemployment levels.

Updated at 10.46am GMT

10.06am GMT

Eurozone unemployment hits record high again

It’s official: Eurozone unemployment has hit a new record high of 11.9%, as the economic downturn forces more people out of work.

That’s up from a new estimate of 11.8% for December (which has been revised up).

That means that 18.998 million men and women were out of work in the euro area, and a total of 26.217m people across the European Union.

The statement’s online here:

More to follow

9.55am GMT

Much gloom in the City following the news that Britain’s manufacturing sector shrank in February (see 9.50am).

9.50am GMT

Britain’s manufacturing sector has also suffered a grim February, with Markit reporting the first contraction since last November.

The UK manufacturing PMI skittered down to 47.9, from 50.5 in January. Economists had expected a rise to 51, and the pound had swiftly shed one cent against the US dollar, to $1.505.

Markit warned that the manufacturing sector will be ‘a drag on economic growth’ this quarter, unless we see a big recovery in March. The triple-dip recession remains a risk.

9.39am GMT

…and this graph shows how German and French manufacturers are now experiencing diverging fortunes:

9.32am GMT

The slump in Italian and French manufacturing output reported this morning could show the region will continue to suffer recession this quarter.

The eurozone manufacturing PMI for February, which measures activity across the region, crept up to 47.9 vs 47.8 in January. That means it still shrank, despite Germany hitting growth again.

Howard Archer of IHS Global Insight commented:

While Eurozone economic activity appears to have bottomed out around last October, it looks highly possible that the single currency area will still suffer a fourth successive quarter of contraction in the first quarter of 2013.

9.21am GMT

When we say ‘record high’ – the Italian jobless data goes back to 1992, so this is the worst unemployment situation in at least 21 years. Certainly since the euro was created.

9.11am GMT

Record unemployment in Italy too

And another blow for Italy: its jobless rate has jumped to a new record high.

Unemployment across Italy is now running at 11.7% of the population, up from 11.3% in January. The youth unemployment rate also rose to a new record high, with 38.7% of young people out of work.

Rising unemployment was a big factor in the Italian election, particularly among parties arguing against Mario Monti’s economic reforms. This will surely bolster their argument.

We get overall eurozone jobless date in just under an hour’s time (10am GMT) – and it could also be another record high (from 11.7% last month).

Updated at 9.12am GMT

9.04am GMT

Italian manufacturing output slides

Economic data just released shows that the Italian economy is in a bad way – manufacturing activity has fallen for the 19th month in a row, and by more than expected.

The monthly PMI survey came in at a mere 45.8 for February, down 47.8 in January — which means the country’s manufacturing sector is shrinking at a faster pace [any number below 50 means contraction].

Other European economies are also reporting PMI data – and it shows that Germany continues to outperform weaker members of the eurozone.

German manufacturing PMI rose to 50.3, from 49.8 in January – meaning it returned to growth.

But France manufacturing sector is still shrinking, but at a slower pace (with a PMI of 43.9, up from 42.9 in January).

8.47am GMT

Bersani says ‘no deal with Berlusconi’

Good morning, and welcome to our rolling coverage of the eurozone financial crisis, and other key events in the world economy.

Italy remains in a state of political flux this morning. Pier Luigi Bersani, the centre-left leader whose hopes of winning this week’s general election were dashed, has this morning ruled out a Grand Coalition with the centre-right.

In an interview with the La Repubblica newspaper, Bersani insisted that he can become Italy’s next leader without getting into bed with Silvio Berlusconi.

He declared:

I want to spell it out clearly: the idea of a grand coalition does not exist and will never exist.

Instead, Bersani hopes to persuade Italy’s president, Giorgio Napolitano, that he could govern without a majority in the Senate (having narrowly won control of the lower house). He has drawn up a seven or eight-point plan to present to Napolitano next Wednesday.

Asked if his goal was to be prime minister in a minority government, Bersani said:

Call it what you want: a minority government, a government of purpose, I do not care.

I call it a government of change, which I assume the responsibility of guiding.

The full interview is online at Bersani’s web site (in Italian).

With Beppe Grillo ( refusing to back Bersani in a vote of confidence, a deal with Berlusconi was the only way the centre-left could get a majority in the Senate.

Some political analysts have questioned whether Napolitano would agree to a minority government, given the implicit instability. We’ll find out next week….

In the meantime, the rest of Europe watches the events in Italy with interest. And one German politician has raised the possibility of the country abandoning the euro.

Klaus-Peter Willsch, a member of Angela Merkel’s CDU party, has even declared that Italy should leave the eurozone, rather than hold fresh elections, if a majority of the population will not support the measures needed to support the eurozone.

Willsch told the “Handelsblatt” newspaper that:

A monetary union will survive only if it benefits all of its members.

It’s a little early to be discussing Italy’s exit from the single currency, I’d suggest – but Willsch‘s comments do show how much concern Italy has created.

As usual we’ll be tracking the action through the day….

Updated at 8.49am GMT © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.