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| Eurozone growth rises to 0.5%; Trump adviser claims euro 'grossly undervalued'- live! | Eurozone growth rises to 0.5%; Trump adviser claims euro 'grossly undervalued'- live! |
| (35 minutes later) | |
| 3.07pm GMT | |
| 15:07 | |
| Grexit talk returns to Greece | |
| Helena Smith | |
| Over to Greece where deadlocked talks with creditors keeping the debt-stricken country afloat have once again raised the spectre of Grexit and the need for contingency plans. | |
| Our correspondent Helena Smith reports from Athens: | |
| It is a scenario that in the ranks of Syriza, the governing left-wing party, no one openly wants. But as the extent of the impasse between Greece and its creditors becomes ever clear – with lenders insisting that without further cuts further bailout loans cannot be made – prominent Syriza figures have begun to talk publicly of the need to address Grexit as a possibility. | |
| Speaking on Skai TV this morning, Nikos Xydakis, former alternate foreign minister for European affairs, said discussion of euro exit should not longer be considered “taboo.” | |
| “There should be no taboos when we’re talking about the nation’s fate. We have come to a point where the populace has run out of stamina. I believe we need an in-depth political and national discussion that has not taken place in seven years and, of course, this discussion needs to start in parliament.” | |
| Given that Germany’s finance minister had repeatedly raised the issue of Greece returning to the drachma it was, he added, impossible to avoid the subject. “What can you say? I’m not going to discuss it when Mr Schauble is saying it,” he asked. | |
| Expounding on his belief that the euro zone will some day dissolve, Syriza MEP Stelios Kouloglou similarly said Athens should be working on contingency plans for a scenario that should not be discounted. “We have to be prepared for every eventuality … the government should be working on a plan,” he told the radio station, Action FM, insisting that if euro exit were to happen Greece should not do it alone but on the coattails of another euro zone member also exiting. | |
| “Italy may leave. If that happens Greece should hide behind it and leave at the time.” | |
| In the wake of virulent response to his comments Xydakis later tried to clarify on his FaceBook page that he was not in favour of Grexit. But his remarks appeared to have opened the door to something far bigger than he may have intended. | |
| In a letter to EU commission president Jean-Claude Juncker, the former commissioner Anna Diamantopoulou demanded to know what plans had been drawn up around Grexit at the height of the country’s debt crisis in 2015. | |
| “Xydakis’ statements - expected although we did not know who would utter them or when - have formally brought the views and thoughts of members of today’s Syriza-Anel coalition government to public discussion. The dilemma, drachma or euro, will sow division with civil war passion in a country which should urgently unite and stand on its feet.” | |
| 2.45pm GMT | |
| 14:45 | |
| Over in New York, Wall Street has opened lower as investors continue to watch political developments closely, and nervously. | |
| The Dow Jones industrial average shed 72 points, or 0.35%, in early trading to 19,901. | |
| Trump’s decision to fire his acting attorney general overnight, following the travel ban that sparked protests in America and beyond, is clearly worrying some traders. | |
| FXTM Vice President of Market Research, Jameel Ahmad says that: | |
| Although some of the selling momentum experienced yesterday throughout the stock markets has cooled down, the market headlines across the globe continue to be dominated by the executive order from Donald Trump to ban certain nationals from entering the United States. | |
| While it has to be taken into account that the record moves seen in the stock markets last week would increase the risks of some investors being tempted to take profits from positions, there is no doubting that this move from Trump has caused outrage across the globe and such actions represent a risk to the market sentiment. | |
| 2.22pm GMT | 2.22pm GMT |
| 14:22 | 14:22 |
| Reuters have helpfully published Angela Merkel’s response to Peter Navarro’s criticism: | Reuters have helpfully published Angela Merkel’s response to Peter Navarro’s criticism: |
| Speaking in Stockholm, on a visit to Sweden, the German chancellor said: | Speaking in Stockholm, on a visit to Sweden, the German chancellor said: |
| “Germany is a country that has always called for the European Central Bank to pursue an independent policy, just as the Bundesbank did that before the euro existed. | “Germany is a country that has always called for the European Central Bank to pursue an independent policy, just as the Bundesbank did that before the euro existed. |
| “Because of that we will not influence the behaviour of the ECB. And as a result, I cannot and do not want to change the situation as it is.” | “Because of that we will not influence the behaviour of the ECB. And as a result, I cannot and do not want to change the situation as it is.” |
| 1.50pm GMT | 1.50pm GMT |
| 13:50 | 13:50 |
| City experts aren’t convinced by Peter Navarro’s comments about the euro: | City experts aren’t convinced by Peter Navarro’s comments about the euro: |
| Now FT reports Trump's top trade adviser accusing Germany of using a “grossly undervalued” euro to exploit the US and its EU partners 2/2 | Now FT reports Trump's top trade adviser accusing Germany of using a “grossly undervalued” euro to exploit the US and its EU partners 2/2 |
| Here’s former UBS chief economist George Magnus: | Here’s former UBS chief economist George Magnus: |
| Which of course is hogwash because it isn't Germany ms currency to influence or manage https://t.co/UBdCZTmgNi | Which of course is hogwash because it isn't Germany ms currency to influence or manage https://t.co/UBdCZTmgNi |
| Bloomberg’s Maxime Sbaihi tweets: | Bloomberg’s Maxime Sbaihi tweets: |
| Anyone claiming that the euro is an "implicit Deutsche Mark" has missed 5 years of #ECB policies shaped against the will of the Bundesbank. | Anyone claiming that the euro is an "implicit Deutsche Mark" has missed 5 years of #ECB policies shaped against the will of the Bundesbank. |
| Keith McCullough, CEO of Hedgeye Risk Management, is even less impressed: | Keith McCullough, CEO of Hedgeye Risk Management, is even less impressed: |
| ridiculously wrong comment of the day from #Navarro > Navarro says Germany is benefiting from gross undervalued euro -FT@realDonaldTrump | ridiculously wrong comment of the day from #Navarro > Navarro says Germany is benefiting from gross undervalued euro -FT@realDonaldTrump |
| Updated | Updated |
| at 1.55pm GMT | at 1.55pm GMT |
| 1.29pm GMT | 1.29pm GMT |
| 13:29 | 13:29 |
| Merkel: We can't influence euro rate | Merkel: We can't influence euro rate |
| Newsflash: German chancellor Angela Merkel has responded to Peter Navarro’s attack. | Newsflash: German chancellor Angela Merkel has responded to Peter Navarro’s attack. |
| She says that Germany cannot influence the value of the euro, and that the country has always pushed for the European Central Bank to be independent. | She says that Germany cannot influence the value of the euro, and that the country has always pushed for the European Central Bank to be independent. |
| *MERKEL SAYS DOESN'T WANT TO INFLUENCE EURO EXCHANGE RATE | *MERKEL SAYS DOESN'T WANT TO INFLUENCE EURO EXCHANGE RATE |
| Merkel response over weak Euro claim - Germany can't influence Euro and has always called on ECB to have independent policy | Merkel response over weak Euro claim - Germany can't influence Euro and has always called on ECB to have independent policy |
| 1.00pm GMT | 1.00pm GMT |
| 13:00 | 13:00 |
| Does Peter Navarro have a point, when he claims Germany is exploiting other countries through its cheap currency? | Does Peter Navarro have a point, when he claims Germany is exploiting other countries through its cheap currency? |
| Well.... Germany posted a record trade surplus in 2015, and will probably do the same when 2016’s numbers are added up. Cheap currencies boost exports, and no-one would argue that the euro would be more valuable if you removed the weaker members from the currency bloc. | Well.... Germany posted a record trade surplus in 2015, and will probably do the same when 2016’s numbers are added up. Cheap currencies boost exports, and no-one would argue that the euro would be more valuable if you removed the weaker members from the currency bloc. |
| Back in 2015, former Federal Reserve chief Ben Bernanke blogged that the German trade surplus was “a problem” for the global economy. He argued that Berlin should boost government spending, and workers’ wages, to help drive it down. | Back in 2015, former Federal Reserve chief Ben Bernanke blogged that the German trade surplus was “a problem” for the global economy. He argued that Berlin should boost government spending, and workers’ wages, to help drive it down. |
| However.... Bernanke also pointed out that Germany has little control over the value of the euro. | However.... Bernanke also pointed out that Germany has little control over the value of the euro. |
| It has fallen near to parity with the US dollar because the European Central Bank has slashed interest rates to record lows (unpopular in Germany), imposed negative rates on banks (unpopular in Germany) and created tens of billions of euros to buy government bonds (unpopular in Germany). | It has fallen near to parity with the US dollar because the European Central Bank has slashed interest rates to record lows (unpopular in Germany), imposed negative rates on banks (unpopular in Germany) and created tens of billions of euros to buy government bonds (unpopular in Germany). |
| Currency wars aren’t a new issue either. NBC correspondent Hans Nichols points out that the Obama administration had its own concerns about the euro, when it was stronger: | Currency wars aren’t a new issue either. NBC correspondent Hans Nichols points out that the Obama administration had its own concerns about the euro, when it was stronger: |
| Worth noting that many of Obama's eco aids (@Austan_Goolsbee?) held a similar view, but back when EURUSD at 1: 1.35. https://t.co/ZCqUIT9V15 | Worth noting that many of Obama's eco aids (@Austan_Goolsbee?) held a similar view, but back when EURUSD at 1: 1.35. https://t.co/ZCqUIT9V15 |
| Updated | Updated |
| at 1.01pm GMT | at 1.01pm GMT |
| 12.47pm GMT | 12.47pm GMT |
| 12:47 | 12:47 |
| The prospect of a currency spat between the US and the eurozone has pushed the euro up against all major currencies. | The prospect of a currency spat between the US and the eurozone has pushed the euro up against all major currencies. |
| The single currency is up 0.7% against the dollar now, to $1.0764, after Trump adviser Peter Navarro claimed it was “grossly undervalued”. | The single currency is up 0.7% against the dollar now, to $1.0764, after Trump adviser Peter Navarro claimed it was “grossly undervalued”. |
| This means the US dollar is still on track to post its worst January since 2008 (as recorded earlier). | This means the US dollar is still on track to post its worst January since 2008 (as recorded earlier). |
| The euro has also gained 0.6% against the pound to 86.1p, meaning one pound is worth €1.1608. | The euro has also gained 0.6% against the pound to 86.1p, meaning one pound is worth €1.1608. |
| Updated | Updated |
| at 2.16pm GMT | at 2.16pm GMT |
| 12.09pm GMT | 12.09pm GMT |
| 12:09 | 12:09 |
| Peter Navarro’s attack on Germany over the euro shows that the Trump administration are concerned about countries who run a trade surplus with the US. | Peter Navarro’s attack on Germany over the euro shows that the Trump administration are concerned about countries who run a trade surplus with the US. |
| Speaking on Bloomberg TV a moment ago, Citigroup global econonomics director Ebrahim Rahbari says that “talking about a currency is much easier than taking specific measures”. | Speaking on Bloomberg TV a moment ago, Citigroup global econonomics director Ebrahim Rahbari says that “talking about a currency is much easier than taking specific measures”. |
| Currency rates have clearly been under discussion for some time, at forums such as the G20, Rahbari points out. | Currency rates have clearly been under discussion for some time, at forums such as the G20, Rahbari points out. |
| So Navarro is “ratcheting up the discussions that have previously taken place”, he concludes. | So Navarro is “ratcheting up the discussions that have previously taken place”, he concludes. |
| 11.51am GMT | 11.51am GMT |
| 11:51 | 11:51 |
| FT: Trump’s top trade adviser accuses Germany of currency exploitation | FT: Trump’s top trade adviser accuses Germany of currency exploitation |
| Hold onto your hats, folks. | Hold onto your hats, folks. |
| The Financial Times is reporting that one of Donald Trump’s advisers has hit out at Germany, saying it gets an unfair advantage due to the weakness of the euro. | The Financial Times is reporting that one of Donald Trump’s advisers has hit out at Germany, saying it gets an unfair advantage due to the weakness of the euro. |
| Here’s the story, by the FT’s Shawn Donnan: | Here’s the story, by the FT’s Shawn Donnan: |
| Germany is using a “grossly undervalued” euro to exploit the US and its EU partners, Donald Trump’s top trade adviser has said in comments that are likely to trigger alarm in Europe’s largest economy. | Germany is using a “grossly undervalued” euro to exploit the US and its EU partners, Donald Trump’s top trade adviser has said in comments that are likely to trigger alarm in Europe’s largest economy. |
| Peter Navarro, the head of Mr Trump’s new National Trade Council, told the Financial Times the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners. His views suggest the new administration is focusing on currency as part of its hard-charging approach on trade ties. | Peter Navarro, the head of Mr Trump’s new National Trade Council, told the Financial Times the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners. His views suggest the new administration is focusing on currency as part of its hard-charging approach on trade ties. |
| In a departure from past US policy, Mr Navarro also called Germany one of the main hurdles to a US trade deal with the EU and declared talks with the bloc over a Transatlantic Trade and Investment Partnership dead. | In a departure from past US policy, Mr Navarro also called Germany one of the main hurdles to a US trade deal with the EU and declared talks with the bloc over a Transatlantic Trade and Investment Partnership dead. |
| Here’s the full story: | Here’s the full story: |
| Trump’s top trade adviser accuses Germany of currency exploitation | Trump’s top trade adviser accuses Germany of currency exploitation |
| The euro is now rising sharply against the US dollar, as traders anticipate action from Washington over this issue. It’s gained almost 0.5% to €1.074. | The euro is now rising sharply against the US dollar, as traders anticipate action from Washington over this issue. It’s gained almost 0.5% to €1.074. |
| Dollar is trading lower in the wake of these comments: Trump trade adviser accusing Germany of manipulating currency https://t.co/2qu7sxB4Qi | Dollar is trading lower in the wake of these comments: Trump trade adviser accusing Germany of manipulating currency https://t.co/2qu7sxB4Qi |
| Updated | Updated |
| at 2.16pm GMT | at 2.16pm GMT |
| 11.30am GMT | 11.30am GMT |
| 11:30 | 11:30 |
| Eurozone data splurge: What the experts say | Eurozone data splurge: What the experts say |
| Here’s some early reaction to the news that eurozone growth and inflation have risen, while the unemployment rate has hit a new seven-year low. | Here’s some early reaction to the news that eurozone growth and inflation have risen, while the unemployment rate has hit a new seven-year low. |
| Michael Hewson of CMC Markets: | Michael Hewson of CMC Markets: |
| In the Eurozone GDP figures have been released this morning. Inflation in Spain has increased to 3% as has the cost of living in France, up by 1.4%; while the broader EU CPI measure jumped to 1.8% largely driven by a jump in energy prices. | In the Eurozone GDP figures have been released this morning. Inflation in Spain has increased to 3% as has the cost of living in France, up by 1.4%; while the broader EU CPI measure jumped to 1.8% largely driven by a jump in energy prices. |
| The French economy grew 1.1% in 2016 slightly less than expected but despite this Michel Sapin, the French minister of finance, insisted the French economy is still moving in the right direction and reducing unemployment. | The French economy grew 1.1% in 2016 slightly less than expected but despite this Michel Sapin, the French minister of finance, insisted the French economy is still moving in the right direction and reducing unemployment. |
| Overall, Eurozone GDP came in at 0.5% for the last quarter which was better than forecast and unemployment fell. All this positive data suggests the Eurozone is recovering slowly, though Italy continues to remain a weak point. | Overall, Eurozone GDP came in at 0.5% for the last quarter which was better than forecast and unemployment fell. All this positive data suggests the Eurozone is recovering slowly, though Italy continues to remain a weak point. |
| Anna Stupnytska, global economist at Fidelity: | Anna Stupnytska, global economist at Fidelity: |
| #Eurozone headline inflation accelerates, big surprise in #Spain and #France. Good for #EUR. Decision time for #ECB #Draghi ahead. pic.twitter.com/GOgAfPX0Ho | #Eurozone headline inflation accelerates, big surprise in #Spain and #France. Good for #EUR. Decision time for #ECB #Draghi ahead. pic.twitter.com/GOgAfPX0Ho |
| In 2016 #Eurozone #economy grew faster than #US, for the first time since the crisis. #Trump #Brexit #ECB #BOE #Fed pic.twitter.com/XPSmxeHTl1 | In 2016 #Eurozone #economy grew faster than #US, for the first time since the crisis. #Trump #Brexit #ECB #BOE #Fed pic.twitter.com/XPSmxeHTl1 |
| Alex Lydall, Head of Dealing at Foenix Partners, | Alex Lydall, Head of Dealing at Foenix Partners, |
| A fresh and intricate new conundrum has reared its ugly head for Mario Draghi this morning as the pressure of a significant uplift in German inflation has pushed the Eurozone figure up to 1.8% for January. | A fresh and intricate new conundrum has reared its ugly head for Mario Draghi this morning as the pressure of a significant uplift in German inflation has pushed the Eurozone figure up to 1.8% for January. |
| The renown ‘powerhouse’ of the Eurozone is now putting significant pressure on the ECB President as euro-sceptics are quickly pointing out that stimulus measures are falling far short of creating a balanced and improved bloc state. Whilst GDP saw an uplift this morning, as well as a diminishing Unemployment rate also posted, inflation has, and will be for the foreseeable future, the focus. | The renown ‘powerhouse’ of the Eurozone is now putting significant pressure on the ECB President as euro-sceptics are quickly pointing out that stimulus measures are falling far short of creating a balanced and improved bloc state. Whilst GDP saw an uplift this morning, as well as a diminishing Unemployment rate also posted, inflation has, and will be for the foreseeable future, the focus. |
| With such wild swings upwards, Draghi will have to adopt Monetary policy accordingly, which at present isn’t hugely clear as to what path he should, or is willing to take. Many analysts suggest Quantitative Easing is falling far short of improving the economic situation, and Draghi always notes ‘other tools’ which he can, and will adopt - perhaps now is the time for him to lay his cards on the table, so to speak. | With such wild swings upwards, Draghi will have to adopt Monetary policy accordingly, which at present isn’t hugely clear as to what path he should, or is willing to take. Many analysts suggest Quantitative Easing is falling far short of improving the economic situation, and Draghi always notes ‘other tools’ which he can, and will adopt - perhaps now is the time for him to lay his cards on the table, so to speak. |
| Neil Wilson of ETX Capital: | Neil Wilson of ETX Capital: |
| The ECB has been wont to point out that core inflation remains a problem and the uptick in prices might not last. And again this remains stubbornly below the headline figure at just 0.9%. | The ECB has been wont to point out that core inflation remains a problem and the uptick in prices might not last. And again this remains stubbornly below the headline figure at just 0.9%. |
| No cause for the ECB to tighten monetary policy just yet but refreshingly upbeat figures nonetheless. The data is improving in Europe but there is as yet no sign of anything other than monetary policy divergence between the Fed and European Central Bank. Greece’s debt problems won’t go away and political risks are abundant. | No cause for the ECB to tighten monetary policy just yet but refreshingly upbeat figures nonetheless. The data is improving in Europe but there is as yet no sign of anything other than monetary policy divergence between the Fed and European Central Bank. Greece’s debt problems won’t go away and political risks are abundant. |