News Column

Euro Declines Amid Risk Aversion

July 10, 2014

BRUSSELS (Alliance News) - The euro slipped against the other major currencies in early European deals on Thursday, as slowdown in China's exports in June and contraction of French industrial output in May sapped investors' appetite for risk.

French industrial production declined unexpectedly in May, after increasing in the previous month, figures from the statistical office INSEE showed.

The industrial production index fell 1.7% monthly in May, in contrast to economists' expectations for a 0.2% growth. In April, production rose 0.3%.

The data, which was followed by weak German exports and industrial production released this week, raised concerns over euro area's economic recovery.

The data from Customs office showed that China's exports rose 7.2% on year in June, missing expectations for 10.4% growth.

The trade surplus came in lower-than-expected at USD31.6 billion in June, and was down from USD35.92 billion in May.

The Euro Area countries should "learn to be sovereign together" in order to fulfill the basic needs of growth and job creation for the citizens, European central Bank's President Mario Draghi said Thursday.

The eurozone crisis revealed that the cohesion of the Union depended on the behaviour of each of its members and hence governing structural reforms are necessary along with fiscal policy governance, he said in his speech in honour of late ECB policymaker Tommaso Padoa-Schioppa.

The euro pared gains to 1.3624 against the greenback, from an early 1-week high of 1.3650. The euro-greenback pair was worth 1.3640 at yesterday's close.

The euro weakened to 138.08 against the yen, its lowest since June 27. The next possible support for the euro-yen pair lies around the 137.00 zone. The pair ended Wednesday's deals at 138.61.

Consumer confidence in Japan increased in June, a report from the Cabinet Office showed.

The consumer confidence index rose to 41.1 in June from 39.3 in May, with all the sub-indices contributing positively to the overall index.

The euro dropped to a weekly low of 1.2144 against the Swiss franc, reversing from an early high of 1.2155. Further decline of the euro-franc pair may see it finding support around the 1.205 region.

The euro eased back slightly to 0.7955 against the pound, from an early weekly high of 0.7967. If the euro extends slide, its next likely downside target lies around the 0.78 level.

The single currency pulled away from an early high of 1.4545 against the loonie with pair trading at 1.4523. On the downside, 1.44 is seen as the euro's next possible support level.

At 7:00 am ET, the Bank of England will announce its interest rate decision. The interest rates are seen on hold at 0.50% and asset purchase program at 375 billion pounds.

The US weekly jobless claims for the week ended July 5 and wholesale inventories data for May, and Canada new housing price index for May are to be released in the New York session.

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Source: Alliance News

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