Euro Slides Amid Eurozone PPI Data
Canbera (July 2) The European currency weakened against most major currencies in the European session amid the release of report showing decline in Eurozone producer price index in May.
Data from the Eurostat showed industrial producer prices in the domestic market dropped 1.0% year-on-year in May, slower than April's 1.2% decline, in line with economists' expectations. In March, prices fell 1.7%.
On a monthly basis, producer prices dropped 0.1% in May, same as in the previous month. Economists had forecast prices to remain flat during the month. This was the fifth consecutive month of decline.
In an interview with French business daily Les Echos published today, the French Prime Minister Manuel Valls called for the European Central Bank to help bring down an "overvalued" euro, by launching a program of bond purchases similar to those undertaken by the US Federal Reserve and the Bank of England , and known as quantitative easing.
Mr. Valls said asset purchases would help weaken the euro and boost euro-zone exporters, as over valued euro is bad for the industry and growth.
The euro fell to 0.7950 against the pound, its lowest since October 2012 . This may be compared to an early high of 0.7979. At yesterday's close, the euro was trading at 0.7970 against the pound. If the euro extends its downtrend, it is likely to find support around the 0.76 area.
House price growth accelerated further to 11.8% in June, the strongest since January 2005 , from 11.1% in May, data from Nationwide showed. The annual growth also exceeded the 11.2% rise forecast by economists.
Against the yen, the euro slipped to a 2-day low of 138.53, from an early high of 139.02. The pair was quoted at 138.85 at yesterday's close. The euro may find support around the 137.77 area.
The Bank of Japan said that the monetary base in Japan surged 42.6% on year in June. That follows the 45.6% spike in May.
Moving away from an early high of 1.5628 against the NZ dollar, the euro dropped to 1.5569. The pair closed yesterday's deals at 1.5579. On the downside, 1.54 is seen as next support level for the euro.
The euro fell to nearly a 2-week low of 1.4397 against the Australian dollar, from an early high of 1.4468. At yesterday's close, the euro was trading at 1.4399 against the aussie. The next possible downside target for the euro-greenback pair lies around the 1.42 level.
The Australian Bureau of Statistics said that Australia posted a merchandise trade deficit of AUD1.911 billion in May-marking an increase of AUD1.131 billion or 145% on the April deficit.The headline figure was well shy of forecasts for a deficit of AUD200 million following the downwardly revised AUD780 million deficit in April.
Against the Canadian dollar, the euro fell to more than a 5-month low of 1.4518 from an early high of 1.4618. The pair closed yesterday's deals at 1.4604. The euro may find support around the 1.42 region.
The euro fell to a 2-day low of 1.3654 against the US dollar, from an early high of 1.3681. At yesterday's close, the euro was trading at 1.3677 against the greenback. If the euro continues its downtrend, it may find support around the 1.35 area.
Looking ahead, the US ADP private sector employment report for June and factory orders for May are due to be released in the New York session.
At 9:00 am ET , the RBA Assistant Governor (Financial Markets) Guy Debelle will deliver a speech at the Financial Times Camp Alphaville Conference , in London .
At 11:00 am ET , USFederal Reserve Chair Janet Yellen will deliver a lecture at the International Monetary Fund , in Washington DC .