News Column

Euro Slides After Disappointing German Retail Sales; Eurozone Data In Focus

August 29, 2014

BRUSSELS (Alliance News) - The euro weakened against its major rivals ahead of the European session on Friday after data showed that German retail sales declined unexpectedly in July.

Data from Destatis showed that retail turnover declined by real 1.4% month-on-month in July, reversing the 1% increase in June. Economists had forecast a 0.1% rise for July.

On a yearly basis, retail sales growth accelerated to 0.7% in July from 0.1% in June. Nonetheless, the rate of growth was weaker than the 1.5% rise forecast by economists.

Traders await the Eurozone CPI for August and unemployment rate for July to be released shortly.

Eurostat will release its flash harmonized index of consumer prices, or HICP, figures for August and the July unemployment report for the Eurozone. Inflation is expected to ease marginally to 0.3% in August from 0.4% in July. The core HICP is estimated to grow at the stable rate of 0.8% year-over-year. The jobless rate is forecast to remain unchanged at 11.5% in July.

The currency is looking for a lifeline in Eurozone CPI Report ahead of ECB policy meeting on September 4 amid talk of potential further easing in the Jackson Hole annual summit.

Meanwhile, tensions between Ukraine and Russia flared up again as Ukraine President Petro Poroshenko has accused Russia of sending its troops into his country and called for an urgent meeting of the United Nations Security Council and the European Council to discuss the issue.

The euro slipped to more than a 2-week low of 0.7934 against the pound, from an early high of 0.7948. If the euro extends its downtrend, it is likely to find support around the 0.791 area.

The euro fell to 1.3159 against the US dollar and 1.2056 against the Swiss franc, from early highs of 1.3185 and 1.2066, respectively. The euro may test support near 1.314 against the greenback and 1.204 against the Swiss franc.

The euro, which ended yesterday's deals at 136.69 against the yen, edged down to 136.57. This may be compared to an early high of 136.84. On the downside, 135.68 is seen as next support level for the euro.

Data from the Ministry of Economy, Trade and Industry showed that industrial production in Japan added 0.2% on month in July.That was well shy of forecasts for a gain of 1.0% following the 3.4% decline in June. On a yearly basis, industrial production fell 0.9% - also missing expectations for a fall of 0.1% following the 3.1% jump in the previous month.

Looking ahead, Canada GDP for June, US personal income and spending data for July and Reuters/University of Michigan's final consumer sentiment for August are due be released in the New York session.

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Source: Alliance News

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