China cuts banks' reserve requirement ratio

China's central bank took further measures to cushion its economic slowdown amid the cheaper shares and the weakening currency by reducing the amount of cash the nation’s lenders must lock away.

The required reserve ratio will drop by 0.5 percentage points effective March 1, the People’s Bank of China said on its website Monday. That will take the level to 17 percent for the biggest banks, still one of the highest such ratios in the world. The move marks a return to more traditional easing after the central bank indicated in recent weeks it would spur growth by guiding interbank markets lower and injecting liquidity through open-market operations.

Governor Zhou Xiaochuan highlighted scope for further action ahead of a Group of 20 meeting in Shanghai last week, saying China had “multiple policy instruments” to address growth risks. Finance Minister Lou Jiwei said at the event that China will expand its fiscal deficit to support structural reforms to the economy, which slowed to a 6.9 percent growth pace last year, the weakest since 1990.

The central bank said it lowered the reserve ratio to guide stable and appropriate growth in credit and create appropriate monetary and financial conditions for supply-side structural reform, according to a statement on its website.

New Approach

China’s central bank has preferred a newer monetary approach in recent months.

“The PBOC had signaled that it was moving away from blunt instruments like the RRR, and toward more subtle tools to manage liquidity and interbank rates,” Bloomberg Intelligence analysts Tom Orlik and Fielding Chen wrote in a note. “That adds to the surprise factor in the return of the RRR.”

People’s Congress

The RRR cut adds to the supply of money in the economy, rather than cutting borrowing costs directly as an interest-rate reduction would. As such, it may not lead to capital outflows in the same way a rate cut could.

The timing suggests the move is an effort to stabilize the stock market before officials gather for the annual session of the nation’s legislature on March 5, according to Li Liuyang, Shanghai-based chief financial market analyst at Bank of Tokyo-Mitsubishi UFJ.

The National People’s Congress is scheduled to meet over the course of nearly two weeks to discuss policies for 2016 and China’s next five-year plan. Premier Li Keqiang will start the proceedings by outlining his work report, which looks back at the past year and outlines plans on everything from economic growth to health and education policies.

Fiscal Firepower

Fiscal policy support will likely be reflected in increased investment and social spending, tax cuts and reforms, and increased quasi-fiscal spending on infrastructure, strategic industries, and social welfare, UBS Group AG economists led by Wang Tao wrote in a recent note. Infrastructure projects such as railways, subways, pipelines, water projects, environmental and new-energy projects will continue to be boosted, they wrote.

That’s where central government fiscal support comes in, to help provincial authorities relocate laid-off workers. That in turn may mean more debt. Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong, said the central bank needs to walk a fine line.

“Today’smove shows that, while they shy away from cutting benchmark interest rates,they are willing to use the relatively high-profile instrument of a RRR cut,”Kuijs said. “It remains to be seen what the effect on the FX market is.However, this move suggests that, in the end, supporting growth takes priority over other considerations.”

Euro area annual inflation down to -0.2%

Euro area annual inflation returned to negative territory in February 2016, according to a flash estimate from Eurostat, published today.

Consumer prices decreased by 0.2% after rising 0.3% in January against the analysts’s expectations of  zero change.

Prices in the services sector are slowing the upward trend by 1% compared to 1.2% in January, Food, alcohol and tobacco products reported an increase of 0.7% compared to 1% the previous month, while non-energy industrial goods were up by 0.3% compared to 0.7% in January. Energy accelerated depreciation from 5.4% to 8%.

Today's report reinforces expectations that the European Central Bank will take aggressively increasing incentives at its next meeting, scheduled for March 10.

Global GDP is expected to increase by 2030

Global GDP will continue to grow until 2030. However, the gap between richest and poorest economies will deepen. This is the estimate of the World Economic Forum. 

These graphics show the change in global GDP distribution between 1970 and 2030 looking at the United States, China and India.

 

The comparison between 1970 and 2016 shows that global growth has almost doubled, with average world GDP, per capita, growing from around $5,000 to over $10,000. The projected growth for 2030 sees world per capita GDP growing to around $14,000.

The United States continues to grow, consistently well above the global average, maintaining its status as one of the world’s largest economies.

What the visualization also shows is the rapid development of China’s economy, starting behind India in the 1970s, overtaking in the mid 1980s and thereafter consistently growing into a more dominant global economy.

The data predicts China will continue growing, but by 2030 it will still be below the world average. India’s growth has been much slower than China’s, meanwhile, but is predicted to increase over the next 14 years.

This visualization highlights the overall growth of global economies, with the poorer ones continuing to lag behind. Africa, for example, sees steady but considerably slower growth than the rest of the world, with much lower levels of per capita GDP across the continent.

In 2015 in Africa, the average GDP per person was $20,000 less than the global average, at around $4,000. The ERS International Macroeconomic Data Set shows that the average GDP per person in the United States for 2015 was more than $50,000.

LSE in merger talks with Deutsche Boerse

The first sure sign for forthcoming merger between London Stock Exchange Group Plc and Deutsche Boerse AG is that there is reached agreement on key posts after completion of the deal. According to an official release of the two exchange operators, the CEO of Deutsche Boerse Carsten Kengeter will remain the same position in the new dominant European exchange operator, while CEO of LSE Xavier Rolet will retire

Just three days after British Prime Minister David Cameron set a date for a referendum on leaving the European Union, the London and Frankfurt-based market operators confirmed the discussions to create a business worth more than 20 billion pounds ($28 billion). Shares in both companies soared.

Acombination of LSE and Deutsche Boerse reflects the inexorable consolidation that has created a handful of titans overseeing much of the plumbing for global trading. The Anglo-German tie-up would have leading positions in equities,derivatives, indexes and clearing, leaving it in competition with just a handful of market operators in the U.S. and Asia.

“It’s very, very important in the context of the connectivity between the Americas, China as we’ve heard, and Europe, and of course London” that one of these global companies is based in the U.K., LSE Chief Executive Officer Xavier Rolet said .

Should regulators approve the all-share merger, LSE Group equity holders would own 45.6 percent of the enlarged group, while Deutsche Boerse stockholders would get 54.4 percent.

The chief executive officers of both companies are keen dealmakers. LSE’s Rolet has bought an index provider and expanded into clearing, while Deutsche Boerse boss Carsten Kengeter spent $1.5 billion in his first days in charge of Europe’s largest derivatives exchange.

An LSE-Deutsche Boerse deal would also create a stronger rival to CME Group Inc., the world’s largest derivatives market. That company was formed by the Chicago Mercantile Exchange’s 2007 acquisition of the Chicago Board of Trade. Then a year later, CME bought the New York Mercantile Exchange.

Discussions between companies don’t necessarily mean a deal will take place. The talks are ongoing, according to today’s statement. Should the firms agree to merge, their key businesses will continue to operate under their existing brand names. The board would have an equal number of directors from both companies.

LSE’s shares jumped 14 percent to 2,630 pence inLondon, their biggest rally since 2008. Deutsche Boerse climbed 3.2 percent to78.80 euros. The shares jumped after Reuters reported shortly after 1 p.m.London time that the companies are in the early stages of exploring a possible merger.

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US and Europe stocks finished profoundly lower on Tuesday

Wall Street closed in negative territory on Tuesday, failing to prolong the rally from Monday as the sentiment was influenced by the global negative mood, the bad US data and the swinging oil prices.

Yesterday the US stocks recorded the biggest loss for a week amid the negative data on consumer confidence and depreciation of oil caused by the refusal of Saudi Arabia to cut production. Ultimately energy companies recorded a fall, dragging and banking sectors. S&P 500 closed with a decline of 1.25%  at 1,921.28 points, supported only by utility companies. Dow Jones wrote off 1.1% to end at 16,431.85 points, while Nasdaq Composite finished with a drop of 1.47% at 4,503.58 points.

A piece of major news is the slump of CB’s consumer confidence, which hinted deterioration in optimism at a level of 92.2 points in February and missed the forecast of 97.2 points.  Sales of existing homes rose by 0.4% to 5.47 million units in January, which is a stronger result having in mind the expected 2.5% drop to 5.32 million units.

Earlier in the day European stocks fell from a three-week peak, erasing most of Monday's gains. Stoxx Europe 600 fell 1.2%, while DAX 30 wrote off 1.6%. CAC 40 wiped 1.4 % FTSE 100 closed 1.3% lower.

Tuesday economic calendar in Europe offered only German data, starting with the fourth-quarter report on GDP. The German economy grew as expected and expanded 0.3% , same as the quarter before, while it increased 2.1% on a yearly and non-seasonally adjusted basis.

Meanwhile the IFO index increased to 112.9 points in February from the 112.5 in January, while the expectations reached 99.8 points, a worse figure compared to the 102.4 points a month ago.

Asian markets ended the trade in red

Asia stocks lost momentum today and closed the trade in red.

Japan's benchmark Nikkei 225 initially rose by 1%  in early trade, but finished with 0.37% down, at 16,052.05. The broader Topix also erased gains and decreased by 0.68% to 1,291.17. South Korea's Kospi reported a decline of 0.11%  to 1,914.22, while the S&P/ASX 200 erased 0.43% and closed at 4,979.58 weighed by losses in the financial and the energy sectors, down respectively with 0.7% and 0.47%.

Chinese markets also lost the momentum from Monday. Shanghai Composite Index fell 0.79%, closing down 22.33 points to 2,903.95, while Shenzhen Composite lost 0.58% of its value, closing at 1,877.18.

Shares of energy companies were trading mixed. Australian Santos and Woodside Petroleum reported a decline in the price of respectively 1.18% and 0.11%. Japan’s Fuji Oil decline was 1.54%, while Inpex added 0.9 %.

Chinese energy companies ended trading mainly with a slump, the decline in the share price of China Oilfield is 1.2%.

The Australian giant BHP Billiton reported a net loss of 5.67 billion dollars for the first half of financial 2016 and reduced the interim dividends by 75% - from 62 to 16 cents per share, below the  expectations of 31 cents. However, shares of BHP Billiton ended the day with an increase of 2.62%.

15 countries that depend on oil exports

Next week, Saudi Oil Minister Ali al-Naimi for the first time will face the victims of his decision not to reduce oil production despite the global glut. US shale oil producers are struggling to survive the worst price collapse for years. The idea of reducing output and losing a good market share to the newbie in the industry – US shale oil producers has a strong aversion to the traditional oil producers around the world.

Oil price today is as cheap as it has not been in the last 12 years. And this is more than bad news for countries whose economies depend mainly on the export of black gold.

Meanwhile have you ever thought about which countries rely most on oil exports?

An analysis of Bloomberg estimated which countries in 2018 will depend most of its oil reserves. Absolute leader in this ranking is Brunei, with oil exports projected to make up over 60 percent of GDP. This is going to be 15 % more than the second most reliant country, Kuwait and Libya, whose economies rely on almost 50 % of oil exports.

This chart shows estimated oil exports as a % of GDP in 2018.

EUR/USD declined over the week

Compared to two weeks ago, last it proved to be less volatile. Except Friday the euro was slipping during the previous week and erased lots of the accumulated gains.

In terms of fundamental agenda there was lack of significant news, but however EUR/USD decreased from $1.1230 to $1.1135 and closed  the week 1.11% lower.

On Monday the euro weakened on Mario Draghi’s speech which in fact didn’t bring anything new. The European Central Bank will be ready to ease monetary policy further in March, having in mind the low oil prices, the global slowdown in growth and the risks from financial market volatility. However this event declined the euro with 50 pips it reached daily lows at $ 1.1120 – 1.1130.

Tuesday showed that the ZEW Indicator of Economic Sentiment for Germany dropped sharply to 1.0 in February 2016 from 10.2 in January but still is above expectations of 0. Meanwhile, the current situation dropped to 52.3 points from 59.7 in the previous month. The single currency was not affected by these news but continued with is downward movement.

Main news for Wednesday came with the U.S. housing starts for January, which unexpectedly dropped with 3.8%. The report of the Commerce Department showed a decrease to 1,099K from 1,143K previously. The building permits ticked fell to 1,202K from 1,204K in December, recoding a 0.2% monthly loss. For the housing market this could be a temporary setback, having in mind the bad weather in some parts of the country.

Positive mood was given by the PPI, which advanced 0.1% in January. We are witnessing an increase on a monthly basis to 0.1% in January from -0.2%, with the yearly change accelerating to -0.2% from -1.0% previously.

Furthermore CPI data on Friday showed an increase of  2.2%, which is the strongest pace of growth since June 2012 when CPI index is up 1.4 %. The inflation in USA in January has improved to 0.0%from -0.1% month-on-month, while the yearly change accelerated notably to 1.4% from 0.7% previously. The strengthening of inflationary pressures is largely due to higher costs for rents, 0.3%, and for medical services by 0.5%. With 0.5% more expensive and medicines sold on prescription. Americans paid 0.6% more for clothing and 0.3% - for new cars. Gasoline continues to become cheaper with new 4.8 percent, while food products account zero change.

 Amid the positive data EUR/USD dropped and failed to hold gains. The single currency  is going back above the  $1.11 and this somewhat presupposes possible further upward movement for the pair.

The new flight of Air France-KLM

The shares of Air France-KLM SA rose with 9 % and thus is back to its first yearly net profit since 2008, mainly doe to the successful plans for spending cuts combined with cheaper fuel finally paid off.

Air France-KLM's turnaround came despite difficult labor relations and the terrorist attacks in and around Paris last year which deterred visitors to the French capital.

But it remains a work in progress. Long-haul rivals like British Airways, owned by International Consolidated Airlines Group, and Dubai-based Emirates Airline as well as discount carriers such as Ryanair Holdings PLC are much more profitable.

Air France-KLM shares were up nearly 9% on Thursday after the airline group said it swung to a net profit of €118 million ($132 million) in the 12 months to Dec. 31 from a €225 million net loss the year before. Revenue rose 4.6% to €26.06 billion.

A 20% drop in fourth-quarter fuel costs led to 6.7% or €446 million reduction in the annual fuel bill, offsetting a 2.8% rise in staff costs. Jet fuel prices have fallen around 41% in dollar terms in the past year as crude oil prices tumbled.

Even so, the group's 3.1% operating profit margin is meager by European standards, contrasting with an 11% margin at IAG in the nine months to end-September and a 26% margin at Ryanair in the nine months to end-December.

2016 vs 2008

2016 did not start well for the global economy. The problems left by the collapse of the Chinese stock exchanges as negative wave quickly overtook and hit the European market.

In January, the billionaire George Soros said that he saw similarities between the situation today and that of the financial crisis in 2008.

"I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008".

While things haven't got that bad yet, analysts at investment bank Jefferies decided to take a look at all the market indicators that were returning to levels not seen since the 2008 financial crisis.

Here are the main ones:

ü  Investors Intelligence net bullishness, or optimism about the market, is -14, a low not seen since March 2009.

ü  The yield offered by companies in the utilities sector relative to the broader S&P 500 is in line with the lows seen in 2008.

ü  US markets have hit more 52-week lows than seen in 2008 and 2009.

ü  The difference or spread between the S&P dividend yield and the 10-year US treasury yield is close to the levels seen in 2008 and 2009.

ü  The percentage of NYSE stocks closing above their 200-day moving average price is 15, the lowest reading since 2011 and before that 2008.

ü  The number of executives buying stock in their own company compared to those selling is the highest since 2011, and before that 2009.

ü  High yield debt is perceived as being at its most risky since 2008 and 2009, according to the difference in yield investors are requiring to buy the debt.

While the Jefferies analysts are at pains to point out that "this is 2016 not 2008,"it's worth noting just how many market indicators are taking us back to the low points of the last decade.

Gold futures fell sharply

Gold futures fell sharply today amid increased interest in riskier assets after Japanese stocks jumped by 7% this morning.

The April contracts of yellow metal dropped by 2.3 % or $28.20 to $ 1211.10 per ounce, after last week recorded its biggest jump from December 2011 onwards as added 7.10 % to its value, which today caused extended  sales.

Gold was shining with a fourth weekly gain amid the crushing global equities, the collapse of  crude prices and the weaker dollar. The fate of the global economy has revived the safe-haven status of gold after years of being treated like the underdog on financial markets.

Last week gold deliveries for April raised with 7.03% and on Friday ended at $1,239.10 an ounce on New York's Comex. Last week they were seen at $1,1157.70 an ounce.

U.S. import prices continued to trend down

Prices for U.S. imports continue their downward trend, having decreased by 1.1% in January, mainly due to the impact of cheaper oil. Even without it, however, the trend is negative for the eighth consecutive month, decreased by 0.2%.

The decline of price index for all imports fell 1.1% in January and this is the most significant monthly decrease since last August, when the index dropped with 1.8%. Even though the decline is more modest than analysts' expectations for 1.4%.

Both fuel and nonfuel prices continued to trend down. Compared to January 2015, prices of imported goods are down by 6.2 %.

Import fuel prices dropped with 12.4 % in January which is the largest 1-month drop since a 12.7- percent decline in August 2015. On a a monthly basis the import fuel prices didn’t rise on a monthly basis since a 1.5% advance in June 2015. The January drop was led by a 13.4-percent decline in petroleum prices, although natural gas prices also fell, decreasing 3.2 percent. The price index for import fuel declined 34.5 percent for the year ended in January, while over the same period petroleum prices fell 35.3 percent and natural gas prices decreased 40.1 percent.

U.S. export prices also fell in January,  declining by 0.8 percent compared to December and 5.7 % last year. Most significant is the decline in agricultural exports – the drop is of 12.7% from January 2015 to January 2016. 

How do you prepare for 2016

How do you do the trading that you do?

No one I know could ever keep up without fundamental analysis.

Did it ever make sense to you to stay apart of the driving factors in the major economies of the world?

So, how do you prepare for 2016?

This was discussed at the last ActivTrades webinar that was held yesterday and led by the professional trader Amit Shah.

The global themes that were pointed were oil prices, Cina and QE.

An overview of the main currencies was taken and it was hinted about their further development.

  

It was shown what are the main global themes driving today’s FX markets, what are the country specific factors that have led us to our current position and what is important for 2016  and finally what to focus on and how to prepare for the rest of the year.

Do not forget:

1.      China China China

2.      Oil

3.      Global stock markets

4.      Listen to central bankers carefully

5.      Be consistent

6.      Follow your trading plan

7.      Stay disciplined.

The present has no ribbon, but your gift keeps on giving here!

Oil prices back below $30

Oil prices dropped during the today’s session. WTI fell below the $27 level as the recent crude oil stockpile report revived fears about the huge supply glut. Futures for WTI plunged 4.30% to $26.27 per barrel, while Brent futures slided with 2.17% to $30.17 per barrel.

The Energy InformationAdministration (EIA) said on Wednesday that total crude stockpiles in the US slipped unexpectedly by 754,000 barrels over the week to February 5, compared to forecasts of a rise of about 3.13 million barrels.However, crude reserves at the Cushing, Oklahoma delivery hub increased to an all-time high of nearly 65 million barrels.The report also showed that gasoline inventories jumped by 1.26 million barrels over the measured week, much more than the rise of 243,000 barrels expected by analysts.Moreover, distillate stockpiles climbed by 1.28 million barrels, compared to afall of 1.58 million barrels expected by the market.On Wednesday, OPEC said in its latest monthly report it pumped 32.33 million barrels per day (bpd) of crude during January, up from the32.20 million bpd seen in December.The cartel expects world oil demand to grow by 1.25 million bpd to94.21 million bpd this year, only a small downward adjustment from the previous forecast. Non-OPEC oil supply is projected to decline by 0.70 million bpd to average 56.28 million bpd.The International Energy Agency(IEA) said earlier this week that oil prices may fall further this year as the global oil surplus is likely to worsen thanks to increased output from Iran. The country produced 2.99 million bpd in January, a rise of about 80,000bpd from prior levels.Iran's Oil Minister Bijan Zangeneh said his country is open to begin talks with other OPEC members as conditions in the oil market continue to decline.The EIA cut its price forecast for WTI to $37.59 per barrel for this year,compared to the $38.54 projected a month ago. The price for Brent should average $37.52 a barrel this year, down from the previously expected $40.15 a barrel.

Precious metals on focus

The continuing risk-off mood of investors helped gold to continue its upward movement that began in January. The yellow metal managed to reach the level of $ 1,200 for the first time since June 2015. Gold gained 12 percent since the beginning of 2016 due to uncertainty about the rise in interest rates by the Federal Reserve.
The precious metal was trading 0.43% lower at $1,192.70 an ounce early on Tuesday, after reaching a high of $1,201.10 an ounce yesterday evening, a level last seen on June 22, 2015.
Silver followed gold on the way up and managed to rise by 2.5%. The noble metal successfully overcame the 200-day moving average and reached $ 15.09 an ounce. The next target is the area around $ 16.
Platinum followed the positive trend of precious metals and rose with 1.8 %. The metal broke the 100-day MA at 897.65. The next target is the 200-day moving average and the level around $ 970.80.

Greek Bank Tragedy

Greek stocks headed to their worst session since 1990 as most badly performed the bank sector. The benchmark index Athens Stock Exchange (ASE) declined by 7.18% at 14:40 GMT, shares of Eurobank Ergasias, Piraeus Bank and National Bank of Greece fell by more than 21%.

Greek stocks once again became the worst performers among a total of 93 global equity indexes.

So far this year Athens ASE stock index erased more than 25%, which is nearly two times bigger decline than in the pan-European Stoxx Europe 600.

 “There’sa complete buyers’ strike across the board today, ” said George Athanasakis,equity sales director at Pantelakis Securities SA in Athens. “It’s all about international malaise hitting a very illiquid market, made worse by that spike in bond yields. There’s the risk that if the government’s aid negotiations dragon for much longer, then the banks and the economy will hurt.”

The benchmark ASE Index fell 6.7 percent at 2:50 p.m. in Athens, with Eurobank Ergasias SA, Piraeus Bank SA and National Bank of Greece SA all down more than 22 percent. With a 26 percent tumble in 2016, the ASE is the worst performer among 93 global equity indexes tracked by Bloomberg. It’s slumped almost twice as much as the Stoxx Europe 600 Index.

The yield on 10-year Greek debt jumped 45 basis points, or 0.45 percentage point, to 10.01 percent. The yield has climbed from 8.29 percent at the end of 2015.

Greece’s government remains at loggerheads with its creditors over demands for additional belt-tightening measures, including pension cuts, while farmers, independent professionals and workers protest its social security overhaul proposals. Representatives of the International Monetary Fund, the European Central Bank, the European Commission and the European Stability Mechanism left Athens after a week of talks on Friday with no breakthrough in sight and date set for their return to complete yet another stalled bailout review.

Even as the government can build arrears to its suppliers and vendors to stay afloat through May in the absence of bailout-fund disbursements, uncertainty is weighing on the country’s recovery prospects. The European Commission said last week that Greece’s economy will shrink by 0.7 this year, after stagnating in 2015. Economic weakness adds to Greek banks’ woes, as lenders struggle to cope with more than 100 billion euros ($111 billion) of non-performing loans and the impact of capital controls imposed last summer.

“TheGreek crisis is not over, it’s not solved, and there are still a lot of problems, so if you want to get rid of risk, then you have to sell Greece as well,” said Christoph Kind, head of asset allocation at Frankfurt Trust, which manages about $20 billion and doesn’t hold any Greek assets. “It’s definitely,risk off, and the periphery is suffering a lot today.”

EUR/USD

It was a very volatile week and we saw euro bulls return.

Next week EUR/USD most probably will experience bigger movements as the uncertainty about the future steps of both the ECB and Fed remains in place.

The euro returned back to the bullish trend, although further gains will be harder to achieve as ECB should „do something” at its March meeting. This should limit the upside potential on the pair.

Monday will see German industrial production for December while Tuesday will bring the current account and trade balance from Germany as well.

On Friday, German CPI and GDP figures are due, followed by GDP figures for the forth quarter from the whole euro zone. Industrial production is expected also and should tick up on a monthly basis.

From the US dollar perspective, the Labor Market Conditions Index is due on Monday and JOLTS Job Openings will be released on Tuesday. However, these numbers are not considered as major and rarely have any impact on the US dollar.

Federal Reserve (Fed) Chair Janet Yellen is due to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington DC on Wednesday. This testimony will be closely watched as Yellen might present some new view on monetary policy (possibly dovish), which would be US dollar negative. She will conclude her testimony on Thursday.

Friday will bring US retail sales for January, which are projected to improve from previous levels. In addition, the University of Michigan consumer confidence gauge is due and should tick higher to 92.5 from 92.0 previously.

Technically speaking, the pair broke all resistances on Wednesday and is now in a bullish trend. The key support for now stands around $1.1040/50, where previous strong highs are located. The resistance is seen at $1.12 as the pair failed to post clear daily close above it. If it falls, a further rise toward $1.14 in the near term is likely as the momentum is bullish.

Daimler hit a record profit for 2015

The German auto giant Daimler reported new levels of sales and earnings in 2015. The earnings before interest and taxes (EBIT) of the Mercedes manufacturer has increased in 2015 over the previous year whit whole 36 % and reached 13.8 billion euros.

The company announced today that sales rose 15 % reaching 149.5 billion euros.

"Daimler grew profitably once again in 2015 and once more achieved record levels of unit sales and revenue, as well as (underlying) and net profit, with contributions from all divisions," the group said in a statement.

"For the year 2016 ... the group assumes that it will profit to an above-average extent from the anticipated slight growth in global demand for automobiles, thus strengthening its position in major markets and further increasing its unit sales. Accordingly, further growth is expected in revenue" and underlying profit, Daimler said.

In 2015, net profit jumped by 23 percent to 8.9 billion euros ($9.9 billion).

Operating profit was up 36 percent at 13.8 billion euros and revenues climbed by 15 percent to 149.5 billion euros.

Daimler said that worldwide vehicle sales were up 12 percent at 2.853 million units.

"2015 was a good year for Daimler," said chief executive Dieter Zetsche. "And everything indicates that 2016 will be another good year."

In view of such confidence, Daimler said it would increase its payout to shareholders.

"At the annual shareholders' meeting on April 6,the board of management and the supervisory board will propose the distribution of a dividend of 3.25 euros per share from 2.45 euros per share," said finance chief Bodo Uebber.

"With thedividend again increased and thus the highest ever profit distribution byDaimler, we will as usual let the shareholders participate in the company'ssuccess, while expressing our confidence about the ongoing course ofbusiness," Uebber said.