News Column

Euro Falls Against Majors

June 12, 2014

CANBERA (Alliance News) - The European currency weakened against the other major currencies in the European session on Thursday, as continuing voilence in Iraq and concerns over global economic growth hurt sentiment.

The World bank on late Tuesday 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.

Amid the crises in Iraq on seizure of Mosul, the Iraq's second largest city, and Tikrit by the Sunni muslim insurgents, led by an al-Qaeda offshoot called the Islamic State of Iraq and the Levant, the the UN Security Council condemned attacks by these Islamist militants. The militants extended their control over northern Iraq, heightening political tensions in Iraq.

In the economic news, wholesale prices in Germany declined at a slower year-over-year rate in May, a report from Destatis showed today.

Wholesale prices fell 0.9% in May over last year, following a 1.3% decline in April. This marked the eleventh consecutive decline in wholesale prices.

Meanwhile, Eurozone industrial production rose a seasonally adjusted 0.8% from March, when it fell 0.4%, which was revised from a 0.3% decline. Economists had forecast a 0.5% increase for April.

The euro dropped to a 1-1/2 year low of 0.8031 against the pound, from an early high of 0.8063. If the euro extends its downtrend, it is likely to find support around the 0.79 zone.

Against the Canadian dollar and the yen, the euro slipped to a 5-month low of 1.4670 and a 4-month low of 137.78 from early highs of 1.4721 and 138.32, respectively. At yesterday's close, the euro was trading at 1.4701 against the loonie and 138.06 against the yen. The next possible downside target level for the euro is seen at 1.45 against the loonie and 136.21 against the yen.

Moving away from an early high of 1.3547 against the US dollar, the euro fell to a 1-week low of 1.3511. Yesterday's closing quote of the euro-greenback pair was worth 1.3530. The euro is likely to target support at 1.34 zone.

The euro fell to a 1-1/2-year low of 1.4366 against Australian dollar, from an early multi-day high of 1.4476. The pair closed yesterday's deals at 1.4412. The next possible downside target for the euro is seen at the 1.42 level.

Against the NZ dollar, the euro fell to a 1-year low of 1.5575 from an early high of 1.5807. If the euro extends its fall, it may possibly find support around the 1.54 area.

The Reserve Bank of New Zealand this morning raised the official cash rate by 25 basis points to 3%, the third rise this year. The OCR raise was in line with the economists estimate.

Against the Swiss franc, the euro fell to a 6-day low of 1.2168 from an early high of 1.2182. Yesterday's closing quote of the pair was worth 1.2172. The euro is likely to find support around the 1.20 area.

In the New York session, Canada new housing price index for April, US retail sales and import price index for May, weekly jobless claims for the week ended June 7 and business inventories data for April are due.

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Source: Alliance News

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