News Column

Euro Falls Amid Risk Aversion

June 11, 2014

CANBERA (Alliance News) - The euro declined against the other major currencies in European deals on Wednesday, as European stocks fell after World bank cut its global growth forecast, citing poor weather in the US, financial market turbulence and the Ukrainian issue served as drags to economic growth in developing counties.

The bank lowered its global economic growth forecast for 2014 to 2.8% from the 3.2% it estimated earlier. The World Bank expects the euro area countries to grow by 1.1% in 2014, while it lowered its growth forecast for the US to 2.1% from 2.8% it estimated earlier While speaking at the IMN Global ABS Conference, Barcelona, Yves Mersch, member of the European Central Bank's Executive Board said that the bank is considering the purchase of asset-backed securities as it help to achieve its primary objective of price stability.

In a speech titled "Next steps for European securitisation markets", Mersch told that the proposal to revive EU ABS markets is to find a more holistic approach to their regulatory treatment. "There is a growing consensus that an instrument once seen as part of the problem could in fact be part of the solution," he added.

The euro reversed from an early high of 1.3546 against the greenback, hovering around early 6-day low of 1.3521. The next possible downside target for the euro lies around the 1.34 zone.

Reversing from an early high of 138.65 against the yen, the euro slipped to a 2-week low of 138.05. If the euro extends slide, it may find support around the 137.00 mark.

The single currency dropped to 0.8053 against the pound for the first time since December 2012. The next possible downside target for the euro-pound pair lies around the 0.80 area.

The UK jobless rate declined below expectations during February to April period and employment increased notably, data from the Office for National Statistics revealed today.

The ILO unemployment rate came in at 6.6%, down from expectations for 6.7%. The claimant count fell to 3.2% in May, in line with forecast, from 3.3% in April.

The 18-nation currency declined to a near 4-week low of 1.5784 against the kiwi and a near 7-month low of 1.4394 against the aussie, off its previous highs of 1.5892 and 1.4457,respectively. On the downside, the euro may find support around 1.57 against the kiwi and 1.43 against the aussie.

The euro that reversed from an early high of 1.4773 versus the loonie eased back to 1.4743. The euro is thus heading to breach its early Asian session's 2-week low of 1.4731.

Meanwhile, the euro held steady against the franc with pair trading at 1.2183, after advancing to 1.2187 during early European deals.

Looking ahead, the US monthly budget statement is to be released at 2:00 pm ET.

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Source: Alliance News

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