Euro Recovers From New Multi-day Lows Against Majors
Friday, the euro recovered modestly against its major counterparts after falling sharply yesterday in the wake of bleak U.S. jobs numbers, which dampened hopes of a global recovery.
The euro thus recovered from a 9-day low against the franc, 8-day low against the dollar, 4-day low against the yen and a 3-day low against the pound.
The euro and currencies such as the Australian dollar, which have benefited from investors’ hopes of an economic turnaround, weakened sharply yesterday after data showed U.S. employers cut 467,000 jobs in June, far more than expected.
The euro had also come under selling pressure after European Central Bank President Jean-Claude Trichet said on Thursday that euro zone activity would probably remain weak for the rest of the year. Earlier, the ECB left its benchmark refinancing interest rate at a record low of 1 percent, as expected.
The Eurostat said today that retail sales in the Euro zone declined 3.3% year-on-year in May, faster than a revised 2.5% drop in the preceding month. Economists expected sales to fall 2.7%.
Month-on-month, retail sales were down 0.4% in May, reversing a 0.1% rise in the preceding month. Economists expected a drop of 0.1%.
The euro fell to a 3-day low of 0.8515 against the pound and an 8-day low of 1.3931 against the dollar by about 5:25 pm ET Thursday. Thereafter, the euro advanced and it is currently trading at 0.8570 against the pound and 1.4020 against the dollar, up from yesterday’s close of 0.8544 and 1.4002, respectively. If the euro gains further, it may likely target 0.863 against the U.K. currency and 1.414 against the dollar.
Data released by the Bank of England showed today that the housing equity withdrawal was minus GBP8.1 billion in the first quarter of 2009.
“The negative figure implies that individuals injected a net total of GBP8.1 billion into housing equity in the first quarter,” the central bank said in a statement.
Economists were looking for a figure of minus GBP9 billion. The fourth quarter figure was revised to a minus GBP7.8 billion from a minus GBP8 billion initially estimated.
The euro strengthened against the yen after hitting a 4-day low of 133.60 at 8:10 pm ET Thursday. As of now, the euro-yen pair is worth 134.80 with 136 seen as the next target level. The pair closed yesterday’s New York session at 134.31.
Against the Swiss franc, the euro is presently trading at 1.5213, gained from a 9-day low of 1.5175 hit at 5:20 pm ET Thursday. The near term resistance level for the euro is seen at 1.525. At yesterday’s close, the euro-franc pair was quoted at 1.5189.
Switzerland’s Federal Statistical Office said the consumer price index r CPI dropped 1% year-on-year in June, the same as in May. Meanwhile, the CPI was forecast to fall 1.1%. On a monthly basis, consumer prices rose 0.2% in June, unchanged from May and defying economists’ expectations for no growth.
Financial markets are closed in the U.S. today in observance of the ‘Independence Day’.
