Japan Rising FOREX Volume

The Financial Futures Association of Japan (FFAJ) circulated data confirming current trend of increasing FOREX volumes across the domain of retail currency exchange. Statistics for the third quarter of last year indicated growth in the FOREX sector. For the over-the-counter market, numbers in Q3 reached a total of $14.6 trillion. This is higher by 132 percent as against the previous quarter.

When it comes to FX contracts, there was a total growth of 68.5 compared to the previous quarter. Some 12,573,762 futures contracts swapped hands all through the last quarter of 2014.

Active customer accounts in retail FOREX increased by 7.1 percent through the quarter and reached $14,000 dollars. Margin deposits strengthened at a similar pace higher by 7.0 percent to $10.7 billion with average account volume of $14,000.

On the other hand, trading diminished at the Osaka Securities Exchange but surged forward at the Tokyo Financial Exchange platform. Trading volumes in Osaka plunged 72.9 percent to 186.9 billion yen while trading in Tokyo edged higher by 8.6 percent. As a result of the dormant first half of 2014, total figures for the fiscal 2014 were lower than those of 2013. OTC FOREX trading was not affected significantly and declined only by four percent. Osaka FX floundered 77 percent and figures in the Tokyo Financial Exchange platform decreased 27.2 percent.

OPEC Emergency Meet is Possible

A good number of OPEC members believe it may be necessary for the cartel to convene an emergency meeting on oil prices and production as a result of the damage brought about by the downfall of crude prices.

Yet, the likelihood of this meeting seems remote.

The oil minister of Nigeria (Diezani Alison-Madueke), who is now OPEC president, divulged that the Arabic Bloc does not subscribe to the idea of a meeting.

This situation cropped up only after three months since the organization’s last summit. Under pressure from Saudi Arabia, OPEC opted not to react to the plunge of oil prices and appeals made by secondary members. They decided to continue with the production of 30 million barrels daily which was the policy for three years.

This strategy obviously conceived by Saudi Arabian Oil Minister Ali al-Naimi was to stop OPEC’s long-established tactic of lowering production to maintain high prices. Instead, OPEC chose to preserve market share versus oil producers like the USA which resorted to expensive extraction techniques like hydraulic fracturing.

According to Ali al-Naimi, the objective was to bring down oil prices so ineffective production methods will not flourish. However, this approach does not seem effective for OPEC members which are not as wealthy as Saudi Arabia. The two OPEC members, which are in a weak position, are Venezuela and Iran. Both nations have been clamoring for a reduction in production.

The OPEC president remains confident that the meeting of the bloc’s 12 members will push through if the price per barrel goes down further. Saudi Arabia will surely reject this proposal even if prices plunge to $20 per barrel.  

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US Dollar and Euro Updates

The US dollar scaled to a one-month peak against major currencies with data on inflation and business orders reinforcing confidence in the nation’s economy and raising expectations the central bank will increase interest rates by the middle of 2015. The currency was also boosted by remarks of St Louis Federal Reserve chair James Bullard that this has a strong impact on fiscal policy.

The greenback’s rise came after uninterrupted losses due to dovish indications from Fed Chairperson Janet Yellen during her bi-yearly testimony before US lawmakers.

US economic officials declared the CPI falling 0.7 percent last month because of the sharp decrease of crude oil prices. However, its core reading increased 0.2 percent quicker than the forecasted growth of 0.1 percent.

This influenced the view of domestic disinflation, according to a currency strategy of a euro bank based in New York.

Another positive figure is the upsurge in orders of durable goods by more or less 2.8 percent.

The dollar last traded one percent upward at 95.224. Meanwhile, the shared currency stumbled 1.4 percent versus the dollar and plunged to a low of one month at $1.1198 (EBS trading platform.)

It went down to three-week lows against the Japanese yen. The euro was down 0.9 percent at 133.70 yen.

The dollar gained almost 0.4 percent versus the yen to 119.27.

On the other hand, the UK pound Sterling decreased 0.8 percent against the US note to $1.5409.

The stop in the dollar’s rally will possibly go on for one or two months, according to analysts.

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US and CFTC Probe Probable Rigging of Precious Metals

The United States Department of Justice along with Commodity Futures Trading Commission will look into the likelihood that 10 large banks are involved in manipulation of markets for valuable metals.

This was revealed by the Wall Street Journal based on sources privy to said inquiries.

Prosecutors from the Justice Department will scrutinize price-setting procedures for gold, silver, palladium, and platinum in the UK.

On the other hand, the CFTC initiated a civil investigation, according to the publication.

The banking institutions being checked are Barclays PLC; HSBC; Credit Suisse Group AG; Bank of Nova Scotia; Deutsche Bank AG; JP Morgan Chase & Company; Goldman Sachs Group; Standard Bank; UBS AG; and, Societe Generale.

Representatives of said banks as well as the DOJ and the Commission did not make any comments.

However, HSBC admitted that the CFTC has given a subpoena to HSBC Bank (US branch) last month asking for documents that had something to do with its operations in precious metals trading.

HSBC has been named in a previous lawsuit filed with US courts in 2014 for a plot to influence the prices of these four precious metals as well as derivatives during day to day precious metals positioning.

Gold Prices Decline to Lowest Level

Prices of gold dropped to its lowest in nearly eight weeks after US Central Bank head Janet Yellen said she was certain about the country’s economic growth and seemed to tone down expectations of a looming rate increase.

Gold for settlement in April slid to $3.50 (0.3 percent) or $1,197.30 per troy ounce at the New York Mercantile Exchange. This was the lowest settlement dating back to January 2.

Prices were unstable after the statement of the Fed chair and reached a high of $1,204.40 per ounce before falling. According to Yellen, employment was gaining in the US and the central bank can take into account an increase within the target range for federal fund rates on a per-meeting basis if economic growth persists.

Higher rates can be adverse news for gold which competes with other profit-generating investments in times of contracting monetary policy.

Gold prices remain down around eight percent since January 22 as demand for the precious metal has been reduced considerably. Platinum is also lower with April settlement down 30 cents ($1,162.60 per troy ounce). This is the lowest for the most actively-traded contract since July of 2009.

The Fed chair underscored overseas risks which include sluggish development in the EU and China.

The next policy meeting of the central bank is scheduled for March 17 and 18 and market investors are positive that rate increases will finally take effect.  

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EUR and USD Updates

The EU’s shared currency was lower versus the US dollar because of gloomy inflation data in Europe while the greenback was stronger due to the congressional testimony of Fed Chairperson Janet Yellen.

The pair of EUR and USD touched 1.1297 in euro trading and consequently consolidated at 1.1324 scaling down 0.09 percent. It will possibly get support at 1.1223 (low of January 27) with resistance at 1.1449 which was the high last February 19.

According to the official report, Europe’s consumer price inflation dropped 0.6 percent last month according to expectations and remained unchanged from the initial projection.

Said rate is way below the European Central Bank's goal of below two percent. Monthly consumer prices went down 1.6 percent last month in step with estimates and after the 0.1 percent decline last December (2014). Core index for CPI increased 0.6 percent last month and met forecasts. Energy, alcohol, food, and tobacco are not included in this list. The euro was higher against the UK pound sterling with the EUR/GBP pair up 0.08 percent to 0.7337.

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NZ Currency Declines after RBNZ Report

The NZ Kiwi dropped after the Reserve Bank of New Zealand tweaked its inflation outlook for 2015 and market traders anticipated additional developments in Greece and reform proposals from Athens to extend its international loans.

The NZD and USD traded at 0.7502 down 0.29 percent and overturned earlier gains after the central bank’s lowering of expectations during latest quarterly point of view.

Prices may increase 1.11 percent until the last quarter as against the fourth quarter projection of 1.59 percent. This was significantly lower than the midpoint target of one to three percent.

Meanwhile, the USD and JPY swapped hands at 118.98 which moved up 0.14 percent. On the other hand, AUD and USD went down 0.08 percent at 0.7797. 
Producer prices in Japan were up 3.4 percent although these were still below estimates of a 3.6 percent gain.

The index for the US currency surged forward 0.02 percent to 94.68. The National Association of Realtors disclosed that current home sales plunged 4.9 percent (4.82 million units) in January from 5.07 million during the previous month. Analysts were looking forward to a drop in home sales of 0.8 percent or 4.97 million units last month.

On the other hand, the Bank of Japan policy meeting revealed three policymakers were in doubt that central bank can meet inflation targets due to a slowdown in underlying prices and low crude price.  

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Euro Group Not United on Greek Issue

The final phase of negotiations between the Euro Group and Greece is scheduled this week. A consensus has to be reached. Otherwise, Athens may be compelled to settle its financial obligations in full if an agreement cannot be achieved within the duration through concessions or argument. Greece proposed a bridge loan of up to six months.

The aim is to extend bailout intercessions with 10 days left until the present agreement runs out. This may seem illogical if the process should begin one week ahead for funds to be ready by the first week of next month. EU member states maintain their objective is to keep Greece in the euro region.

Greece asserts that it has to leave if its terms are not granted. Current conditions are beyond the nation’s capacity to repay its huge arrears. However, Germany has rejected this line of reasoning and declared again and again that the bailout is not flexible. The German-led group says the recent bridge loan offer allows

Athens to renegotiate the accord. Germany’s allies include Malta and the Netherlands. Slovakia has become more lenient on Greece while French Prime Minister Manuel Valls declared the offer of Athens is sound basis for negotiations. Portugal and Spain are not expected to look sympathetically at the position of Athens. At the same time, the country’s request for additional time was greeted by European Commission President Jean-Claude Junker positively, according to the EC spokesperson. The assessment is this can lead to an even-handed compromise.  

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AUD and USD Updates

The Aussie currency went up to a two-week high versus its US peer as craving for riskier assets was bolstered after majority of EU finance ministers agreed to extend the €240 billion-bailout of Greece by four more months.

The Greek government was given till today to formulate reform measures that must be approved by the trio of European Central Bank, European Commission and International Monetary Fund.

Athens is confronted with the possibility of non-payment and departure from the European Union if it fails to secure a postponement beyond the cut-off date of February 28.

The currency pair of AUD and USD gained a session peak of 0.7849 last Friday which is the highest since February 6. It eventually consolidated at 0.7842. It was up 0.65 percent for that day alone and 0.95 percent higher for the entire week.

Minutes published by the Reserve Bank of Australia stated that it reduced rates because of the fading economic outlook in the country.

The RBA shocked markets earlier this month when it brought down benchmark interest rates to a fresh-low of 2.25 percent from 2.50 percent.

 

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Euro Currency Gains on Greek Bailout Extension

The shared currency moved up versus the US dollar following the decision of EU finance ministers to stretch out the financial bailout for Greece by another four months.

Athens can now bargain for a much longer debt reprieve with its creditors.

This pact also eliminates the immediate possibility that Greece will be eased out of the European bloc.

Many FOREX analysts see this as an upside for markets in the euro region. The euro rallied reached a high of $1.1428 and settled at $1.1402. Prior to this meeting, it fell to $1.1287.

Meanwhile, Germany said it wants considerable improvements in terms of reforms by Greece before it agrees to extension of the funding.

Some investors are apprehensive that renegotiation of financial aid for Greece can affect other euro nations that require similar rescue packages.

They believe that it will expose the euro zone to numerous scenarios that will generate more economic volatility.

At the same time, traders will monitor closely the testimony of US Central Bank chair Janet Yellen before the Senate Banking Committee on Tuesday regarding indications of when the Fed will increase interest rates.

Moody’s Cuts Credit Rating of Russia for Second Time

Moody’s Investors Service trimmed down further the credit rating of Russia to less than investment grade because of continuing financial insecurity in the country.

The rating firm company relegated Russia to Ba1 considered the highest junk level similar to Portugal and Hungary. This followed Standard & Poor’s verdict to reduce Russia to speculative status last month.

Moody’s cited current and future international injunctions, attrition of FOREX cushions, steady decline of crude oil prices, and rising inflation that adversely affects incomes together with business performance and consumer confidence.

The world’s largest exporter of energy is close to a recession after oil fell to the lowest since five years ago and Western powers imposed penalties on Moscow. These restrictions have forced corporate borrowers out of world debt markets and reduced investor appetite for the domestic currency and Russian stocks or bonds.

Demotion to junk from two rating agencies can compel money managers whose investment policies forbid them from having debt classified below investment grade to sell $5.8 billion of dollar-denominated and local bonds, according to reports.

This will lead to forced selling. Eventually, there will be further deterioration in terms of outlook, according to economic analysts.

Moody’s decision disregarded economic information made available by the finance ministry as well as current monetary policies, according to Russian Finance Minister Anton Siluanov.

The income on $3 billion worth of dollar bonds payable in 2023 climbed up 1.72 percentage points in 2014 (6.4 percent). The ruble dropped 42 percent to 62.05 per US dollar during that period. It is the worst performer among 31 principal currencies.

European Union President Donald Tusk has asked member-nations to impose possible tougher measures due to ceasefire violations made by Russia.

India’s FOREX Reserves Ascend

FOREX reserves of India reached a peak of $327.88 billion based on published reports of the Reserve Bank of India. This was an increase of $5.8 billion from the previous mark of $322 billion.

The preceding record was $322.12 as of January 16. This can be attributed to the considerable purchase of bonds and likely economic reforms that will be initiated by the government as well as successful reduction of inflation by the central bank.

Foreign investors were responsible for pouring in $26.4 billion worth of bonds and $16 billion of shares last year.

The central bank is striving to stabilize the currency following the rupee’s plunge 10 years ago due to diminishing reserves and excessive current account shortfall.

The Indian currency has been one of the best performers in Asia during the first six weeks of 2015. It gained two percent versus the US Dollar because of capital inflows and anticipation that the RBI will ease policy just to enhance growth.

Central Bank Governor Raghuram Rajan defended the RBI’s intervention in the FOREX market to preserve the stability of the rupee.

He also stated the existing account shortage will probably decline to 1.3 percent of Gross Domestic Product. It can even go down lower next fiscal year. The deficit has dwindled by 4.8 percent. FOREX assets increased to $303.32 billion ($5.814 billion). These include appreciation/depreciation of other currencies like the yen, euro and pound sterling. Gold reserves were unmoved at $19.377 billion.

Bitcoin in Retail Transactions

A significant number of vendors have accepted Bitcoin transactions. Yet, the digital currency still lacks impetus in retail transactions.

There is no clear indication that bitcoin can finally be used in purchasing principal commodities and services. While merchants like Microsoft, Expedia, and online retailer Overstock.com recognize the crypto currency, there has been very minimal increase in purchases making use of the bitcoin.

The truth is this currency is used mainly for Internet gambling, procurement of illegal merchandise and services, and pure speculation.

Researchers from the Federal Reserve disclosed in a recent market analysis that bitcoin is hardly used for payments of mainstream products.

Last week, it was recorded that almost 200,000 bitcoins swapped hands daily. However, only less than 5, 000 bitcoins or approximately $1.2 million in cost were utilized for retail operations. A crypto currency technology firm based in 

Hong Kong disclosed that retail volume last year was predominantly flat.

Consumers are not inclined to adopt the currency due to the popularity and convenience of credit cards. Besides, bitcoins are seen more as investments instead of currencies that can be used to buy real goods or pay for services.

ASEAN can be another European Union

The Association of Southeast Asian Nations is expected to adopt a unified common market format in December of 2015.

ASEAN has a current membership of 10 nations.

However, disbelievers are convinced that the European Union approach to economic integration is not suitable for this Asian body.

Nonetheless, there are procedures in place to lessen trade obstacles and improve flow of investments.

In the meantime, Malaysian and Indonesian leaders are advocating an integrated time zone instead of three sectors that extend over the ASEAN region. One time zone can make business dealings easier and facilitate synchronized opening times for stock markets and banking institutions.

There are many qualms as to the creation of the AEC or which aims to bring together economies within the ASEAN.

Some observers believe the AEC is a weak organization and point the finger at impediments to real economic amalgamation. These include economic patriotism as well as refusal to accept overseas industries in member nations like Indonesia along with maritime disagreements in the South China Sea that jeopardizes regional collaboration.

Just like the European Union, the AEC must make every effort to establish stronger regional connections and investment opportunities.

At the same time, a single currency like the euro may not be feasible for ASEAN.

UK Pound Sterling Advances

The UK currency was up versus other major currencies on more buoyant signals of the country’s economic prospects.

Median wage growth increased to 2.1 percent (December) and surpassed inflation rates which dropped to 0.3 percent in January. It propelled the pound sterling nearly one percent higher to 73.64 pence for every one euro.

The pound is seen as safer bet compared to other currencies in the euro region given sustained growth and greater bond yields.

Positive data is expected to counterbalance concerns regarding deflation, according to brokers.

Analysts also contend that the sterling seems a very viable option for investment and pension managers apprehensive about negative proceeds on German and euro government bond yields.

The pound went up by ½ percent to $1.5434.

Elsewhere, the Japanese yen edged higher following the decision of the Bank of Japan to maintain a steady policy.

According to Central Bank Governor Haruhiko Kuroda, there was no pressing need to open out monetary stimulus as inflation was headed towards their goal of two percent. However, he stated that the BOJ can always change its course if the outlook for inflation changed.

The shared currency declined by one-third percent to $1.1374 while the yen traded generally flat at 119.29 yen for every US dollar.

Russian Rubble Edges Higher

The Russian currency moved up versus the US currency which dropped 1.5 percent versus the ruble. 

An official from the finance ministry told reporters that the central bank has began converting international currencies from the reserve fund into local notes.

The head of the long-term strategic planning department (Maxim Oreshkin) revealed they expect to finalize the exchange of 500 billion rubles or $8.01 billion. This is the same amount that the government intends to disburse within the end of this week. This will come from the bank’s reserve account in 2015.

Said conversion will not pass the FOREX market, at least at the outset, but the funds may be utilized by the department and deposited in Russian banking institutions through deposit auctions, the official stated.

Russia’s central bank informed media that it will consider the current FOREX market situation in converting reserve funds in the currency markets.

Central bank officials insist that this exchange will not have effects on inflationary processes since the institution will make use of other instruments to offset potential increases in ruble liquidity.

US Dollar Index Strengthens

The US currency was up versus the common currency as the currency pair of EUR and USD toppled to 1.3363 (0.28 percent).

The pair will possibly earn support at 1.3338 with initial resistance at 1.3422 which is the 20-day exponential moving median.

Meanwhile, the dollar rose against the franc. USD and CHF moved forward 0.41 percent to 0.9061. The dollar remained steady against the Canadian note with USD and CAD dropping 0.08 percent (1.0886). The pair looks forward to support at 1.0864 with resistance at 1.0925.

The US currency was down versus the UK pound sterling with GBP and USD advancing 0.24 percent to 1.6731.

Risk mode was evident in stock markets after continuing talks among foreign ministers of Russia, Germany, France, and the Ukraine. They talked about the involvement of Moscow in providing humanitarian assistance to southeastern Ukraine after soldiers from Ukraine assaulted a convoy from Russia last week.

The news caused the US dollar to plummet as traders opted for safe haven currencies like the Swiss franc and Japanese yen.

Amplified risk craving affected gold which scaled down early this week.

Gold declined $7.50 (1,298.70 per ounce while spot gold plummeted $6.69 ($1,298.01 per ounce).

Euro Scales Down

The euro slipped after negotiations to acquire a different debt covenant for Greece broke down.

Breakdown in discussions between Athens and other EU members fueled misgivings regarding the future of Greece in the bloc.

The shared currency lost 0.15 percent going down from $1.1429 to $1.1339. It also declined versus the Swedish crown.

FOREX strategists believe there will be a slow decline of the euro and dollar as well as euro and pound sterling in the near-term.

The euro also plunged to 134.40 Japanese yen after touching a one-week trough of 133.96 yen. Meanwhile, the US currency scaled up 0.1 percent to 118.52 Japanese yen.

The downfall of Greek debt consultation flustered some investors. Nonetheless, there is hope of an eleventh-hour deal happening in favor of Greece.

Yet, the market does not appear to be troubled by a likely exodus of Greece from the Union. The common currency regained the 1.14 rank in succeeding trades based on the robust that anticipated sentiment survey of the German ZEW economic sentiment.

Stakeholders will be watching Greece carefully during the next few days. The European Central Bank will have to come to a decision whether to provide emergency loans to Greek banks which are facing problems of bleeding deposits. According to Dutch Finance Minister and lead person Jeroen Dijsselbloem, Athens should request for an extension before the weekend.

Greece Stock and Bond Index Declines

Stocks and bonds in Greece plunged significantly as German Finance Minister Wolfgang Schaeuble announced he doubted that a compromise was possible.

Meanwhile, the Russian ruble consolidated following the second day of the Ukraine truce while Brent crude reached the highest level after two months.

The ASE Index of Greece dropped more than four percent while STOXX European Index decreased 0.1 percent after it finished at a seven-year peak last week. The ruble gained a one-month high versus the US note. Brent increased to $62.57 (1.7 percent per barrel).

According to Schaeuble, dialogues that were meant to forge an agreement between Greece and international lenders did not make substantial progress to break a stalemate.

Three-year note profits in Greece went up 123 basis points (1.23 percentage points) after falling 17.08 percent. 10-year yields climbed up 24 basis points or 9.50 percent.

On the other hand, the 10-year bunds of Germany hardly changed with yield recorded at 0.35 percent. These are known as the benchmark sovereign securities in the European Union.

STOXX 600 plummeted after two weeks of gains and incurred a trading volume of 17 percent which is lower compared to the one-month average.

The standard equity gauge in Europe rose 10 percent as against the 1.9 percent advance of Standard & Poor’s 500 Index and the 2.6 percent gain of MSCI World Index.

The Russian ruble moved forward by 1.8 percent. Five-year bond yields slipped 41 basis points or 12.94 percent. MICEX Index went down 2.6 percent while the Ukrainian currency fell 1.1 percent while the 2017 Eurobond plunged 0.16 cent (53.97 cents) on the US dollar.

The sovereign credit rating of the Ukraine was reduced to the lowest. The nation already consented to a bailout worth $17.5 billion from the IMF.

Shared Currency Gains Ground

EU’s common currency rose earlier than the meet of finance ministers in the euro region regarding the bailout program for Greece.

The euro earned one third percent versus the largely weak US currency trading at $1.1421. It remained flat against the Japanese yen but was 0.2 percent higher compared to the pound sterling.

Analysts of Barclays Bank believe the euro will be more unstable and the exodus of Greece will turn out negative for the Union. They claim that a Greek concord without enough restriction or liability can possibly raise the currency in the short-term.

The US currency scaled down less than 0.1 percent from 118.70 to 118.65 yen before the week ended. The ECB as well as central banks of Australia, Canada and Sweden embarked on stimulus measures during the past weeks.

Speculators have scaled back wagers against the Japanese yen on prospects of trouble-free policy position by the BOJ.

Meanwhile, the UJ sterling climbed to $1.5437 from about $1.5407 and touched a peak that was last recorded on January 2 at $1.5433. The kiwi reached close to ½ percentage point (0.7493) due to potent domestic retail sales statistics after hitting a three-week peak of $0.7502.

China Shifts to US Currency Assets

Beijing anticipates its cross-border investments and trade money to remain unstable in 2015 after capital outflows hastened during the last quarter of last year.

This was revealed by the FOREX regulator of China yesterday.

China’s State Administration of Foreign Exchange or SAFE declared the nation’s capital and financial accounts revealed a shortfall of $91.2 billion from October until December of 2014.

This was up from $9 billion during the previous quarter.

Many Chinese residents and companies have switched to US dollar assets which stimulated the outflows.

Likewise, there are complicated and varied aspects that generate instability in overseas capital flows even as this nation continues to incur huge trade excess while the Yuan’s interest rate is higher than other currencies.

According to SAFE, the local currency’s exchange rate can stay inflexible in the interim as an emergency precaution to handle both internal and external issues.

However, the rate must change eventually to avert any disparity and distortion alterations in the economic system.

The agency said it monitors closely capital flows that cross national borders.

A number of economic analysts fear that escalating capital outflows squeezed liquidity conditions and threaten to slow down further the country’s economy. This can compel the People’s Bank of China to loosen fiscal policy more.

Euro Region Economy Strengthens Modestly

The outlook is economic growth in the euro area should get moving faster in 2016.

A professional audit company based in the UK foresees that the EU will realize a GDP growth of 1.2 percent for this year which will increase to a yearly 1.6 percent from 2016 until 2018.

This positive development is attributed to low crude prices, confidence in the banking industry, weak single currency, and alleviating monetary austerity.

The euro zone is also expected to perceive export growth of 3.7 percent this year and a little higher at four percent during the next three years.

However, eight EU nations have public debt at more than 90 percent of GDP. At the same time, six of these nations have little space for economic stimulus. If inflation does not accelerate faster in the next few years, it remains uncertain if the massive sovereign bond acquisition program will have substantial impact.

A number of governments in the zone have already started to reduce austerity programs which should spur the growth of domestic demand.

The drawback is slower growth in China and other Asia-Pacific countries, which are primary destinations for EU exports and investments and exports, will make the region more at risk. This can be aggravated by immensely feeble growth in France as well as retrenchment in Italy.

The rapidity of euro area economic progress from 2016 to 2018 will be over ½ percentage point slower compared to 10 years ago when it reached 2.3 percent annually.

Germany is ahead of France while Italy is sluggish. Other countries such as Spain, Portugal and the Netherlands were stable. The EU as one overcame expectations.