eur news

Euro Higher Ahead of ECB, Fed Speak

Monday, 16 October 2006 09:25:50 GMT  |  Terri Belkas, Junior Currency Analyst

This morning’s European economic calendar was light, as EUR/USD tacked on mild gains ahead of European Central Bank President Jean-Claude Trichet’s speech at 10:00GMT. Comments from Mr. Trichet and other central bankers have been notably hawkish as of late, and traders will be looking for follow-through in today’s speech. In economic news, Italian national CPI was revised slightly lower in the month of September to -0.1% on the back of falling energy prices, bringing the annual rate down to 2.1%. However, the EU harmonized figure saw upward revisions to 0.7% month over month and 2.4% year over year as a result of strong clothing and shoes prices. Substantial event risk looms on the horizon for the EUR/USD pair as US Fed Chairman Ben Bernanke is scheduled to speak at 17:30GMT today and Euro-zone CPI and the ZEW survey are set to be released Tuesday. As of 9:19GMT, EUR/USD trades at 1.2517, up from Friday’s New York close of 1.2507.

European shares were fractionally higher on Monday, with rising oil companies and merger speculation driving sentiment. In early trade, the FTSE Eurofirst 300 was up 0.1 per cent to 1,441.56, Frankfurt’s Xetra Dax added 0.1 per cent to 6,175.9, the CAC 40 in Paris rose 0.1 per cent to 5,355.3 and London’s FTSE 100 climbed 0.1 per cent to 6,159.1. Banca Popolare Italiana gained 4.2 per cent to €10.82 after accepting a takeover bid from domestic rival Banca Popolare di Verona e Novara in a share swap worth over €8bn. BPVN will offer 0.43 of its shares for each BPI share, while BPI shareholders will also receive an extraordinary dividend of €2. Shares in BPVN fell 4.5 per cent to €21.79. Oil companies figured high up on the Eurofirst leaderboard as crude prices continued to rise after Opec, the oil producer cartel, announced an emergency meeting in Qatar later this week to discuss how to implement production cuts. Norsk Hydro gained 3.2 per cent to NKr154.75, while Statoil rose 2.8 per cent to NKr165.50 and Neste Oil climbed 2.2 per cent to €24.33. Philips, the Dutch electronics group, fell 2.1 per cent to €27.33 after missing forecasts with its third-quarter core profit. An unexpectedly large charge for asbestos liabilities and losses at its flat-screen joint venture LG.Philips LCD hit the company’s results.

European fixed income markets were little changed ahead of speeches by Mr. Trichet and Mr. Bernanke, with prices on 10-year German bunds up slightly to 101.380 and yields steady at 3.824%.

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