Euro Falls From New Multi-day Highs Against Dollar And Yen
In early European deals on Wednesday, the euro pared the gains it posted in Asian deals against the currencies of U.S. and Japan. The euro thus dropped from a 13-day high against the dollar and a 5-day high against the yen. Meanwhile, the euro recovered from a 6-day low against the franc and the pair is presently trading at a 5-day high. Against the pound, the euro remained lower today.
In economic news, the Euro-zone current account balance on a seasonally adjusted basis showed a deficit of EUR 5.9 billion in April, smaller than the EUR 7 billion deficit registered in March. At the same time, on an unadjusted basis, the current account deficit widened to EUR 9.2 billion in April from EUR 4 billion in March.
Another report showed that retail sales in Italy dropped 0.4% month-on-month in April, after rising 0.1% in the preceding month. Economists expected sales to be flat. Year-on-year, retail sales dropped 0.6% in April compared to a 5.2% fall in March, and also slower than economists’ expectation of a 2.8% decline.
Consumer confidence in Italy rose to its highest level since December 2007, economic think thank ISAE said today. The gauge for households’ confidence about the economy rose to 105.4 in June from a revised 104.9 in May. That was an unexpected increase because economists’ had predicted the reading to fall slightly to 104.7.
The euro, which closed yesterday’s trading at 0.8557 against the pound, fell to 0.8494 during early deals on Wednesday. The next downside target level for the euro-pound pair is seen at 0.840.
At 5:15 am ET Wednesday, the euro touched 1.4057 against the dollar, dropping from a 13-day high of 1.4139 hit in Asian deals. If the euro-dollar pair slides further, it may test near term support around the 1.383 level.
The euro weakened against the yen after hitting a 5-day high of 135.0 at 2:35 am ET Wednesday. As of now, the euro-yen pair is trading near yesterday’s close of 134.06 with 131.5 seen as the next target level.
The yen tumbled in Asian deals after reports showed that Japan’s trade surplus declined and the nation’s corporate service prices fell at a record pace in the month of May, casting doubt on the nation’s growth prospects as the economy struggles to emerge from its worst postwar recession.
Japan’s Finance Ministry said that Japan posted a trade surplus of 299.8 billion yen, a decrease of 12.% on year. Most experts has forecast a surplus of 214.6 billion yen.
Exports in May fell 40.9% from a year earlier, the eighth straight month of decline, on weak overseas demand for cars, steel and electronic parts, the data showed. Imports dropped 42.4% in May, marking the seventh straight month of decrease.
The corporate services price index in Japan plunged 3% year on year to 92.4 in May, the sharpest decline since the data began to be compiled in 1985, the Bank of Japan said today.
The euro tumbled to a 6-day low of 1.5015 against the Swiss franc by about 7:25 am ET Tuesday. The euro gained thereafter and made a sharp spike higher at 6:40 am ET Wednesday. Currently, the euro-franc pair is trading at a 5-day high of 1.5096. If the pair advances further, it may likely target the 1.515 level.
Traders are now likely to focus on the North American session, in which the U.S., Commerce Department is set to release its durable goods orders report at 8:30 am ET. Economists look forward to a 0.9% decline in durable goods orders for May.
The Commerce Department is also due to release its new home sales report for May at 10 am ET. The consensus estimate calls for an increase in new homes sales to 360,000.
The Federal Reserve Open Market Committee began its two-day policy meeting yesterday and will make an announcement at 2:15 pm ET today. The U.S. central bank is widely expected to keep interest rates on hold at a record low and keep its planned debt purchases unchanged.
At its April meeting, the Fed maintained its key fed funds target rate unchanged at a range of 0%-0.25%. The FOMC noted that the economy continued to contract, with the pace of contraction slowing somewhat. Despite the stabilization in consumer spending, the committee noted that spending continued to be constrained by job losses, lower housing wealth and tight credit.
Exports in May fell 40.9% from a year earlier, the eighth straight month of decline, on weak overseas demand for cars, steel and electronic parts, the data showed. Imports dropped 42.4% in May, marking the seventh straight month of decrease.
The corporate services price index in Japan plunged 3% year on year to 92.4 in May, the sharpest decline since the data began to be compiled in 1985, the Bank of Japan said today.
The euro tumbled to a 6-day low of 1.5015 against the Swiss franc by about 7:25 am ET Tuesday. The euro gained thereafter and made a sharp spike higher at 6:40 am ET Wednesday. Currently, the euro-franc pair is trading at a 5-day high of 1.5096. If the pair advances further, it may likely target the 1.515 level.
Traders are now likely to focus on the North American session, in which the U.S., Commerce Department is set to release its durable goods orders report at 8:30 am ET. Economists look forward to a 0.9% decline in durable goods orders for May.
The Commerce Department is also due to release its new home sales report for May at 10 am ET. The consensus estimate calls for an increase in new homes sales to 360,000.
The Federal Reserve Open Market Committee began its two-day policy meeting yesterday and will make an announcement at 2:15 pm ET today. The U.S. central bank is widely expected to keep interest rates on hold at a record low and keep its planned debt purchases unchanged.
At its April meeting, the Fed maintained its key fed funds target rate unchanged at a range of 0%-0.25%. The FOMC noted that the economy continued to contract, with the pace of contraction slowing somewhat. Despite the stabilization in consumer spending, the committee noted that spending continued to be constrained by job losses, lower housing wealth and tight credit.
