European Session – Euro higher on Nowotny remarks, pound up despite slower UK inflation
January 14, 2014 2:30 pm
Positive newsflow from the Eurozone kept the euro buoyed while the pound recovered after UK inflation data. In other news, US retail sales helped the dollar against the yen but otherwise had little impact.
The main data release during the European session was UK CPI data for December, which showed a slower pace in inflation at 2% versus a prior 2.1%. The pound initially dropped on the news to 1.6395 but soon recovered later in the session to highs of 1.6450.
The slowing rate of inflation raised concerns that the Bank of England would not hike rates. However as investors digested the data, some analysts believe that abating price pressures would continue to support the real purchasing power of UK consumers and help support growth. Meanwhile, the inflation rate was in line with the central bank’s 2% target rate and this was the first time in more than four years that it was achieved.
The pound ended the session at 1.6414 with a 0.2% gain against the dollar.
Other data releases were from the Eurozone which showed industrial production for November beat forecasts, rising more-than-expected to 1.8% month-over-month, easing concerns over the outlook for growth in the region. A 1.4% growth rate was expected.
What caused the euro to jump to an early session high of 1.3698 from 1.3648 were upbeat comments from the European Central Bank’s Governing Council member Ewald Nowotny who said economic growth in the Eurozone may exceed expectations in 2014.
The euro ended the session with a 0.03% gain versus the dollar to 1.3666. Against the yen, the euro gained 0.2% to 141.63.
The US dollar bounced against the yen today after falling the previous two days, recovering over 80 pips from Monday’s low when the pair was hurt by disappointing US nonfarm payrolls. The pair traded the second half of the European session above 103.50 reaching highs of 103.75 after solid US retail sales data. December sales rose more-than-expected by 0.2% versus 0.1% forecast.
The dollar gained 0.2% against the yen to 103.65.
Meanwhile, weak fundamentals are weighing on the Japanese yen after data today showed a record deficit in Japan’s current account in November.
Looking ahead to the US session, focus will be on two speakers from the Federal Reserve – Charles Plosser, president of the Philadelphia Fed, and Richard Fischer, Dallas Fed President. This comes after Friday’s disappointing nonfarm payrolls, so as investors are still digesting the news, there will be interest in what the two Fed governors made of the data and if it will affect the pace of tapering from the Fed.
Positive newsflow from the Eurozone kept the euro buoyed while the pound recovered after UK inflation data. In other news, US retail sales helped the dollar against the yen but otherwise had little impact.
The main data release during the European session was UK CPI data for December, which showed a slower pace in inflation at 2% versus a prior 2.1%. The pound initially dropped on the news to 1.6395 but soon recovered later in the session to highs of 1.6450.
The slowing rate of inflation raised concerns that the Bank of England would not hike rates. However as investors digested the data, some analysts believe that abating price pressures would continue to support the real purchasing power of UK consumers and help support growth. Meanwhile, the inflation rate was in line with the central bank’s 2% target rate and this was the first time in more than four years that it was achieved.
The pound ended the session at 1.6414 with a 0.2% gain against the dollar.
Other data releases were from the Eurozone which showed industrial production for November beat forecasts, rising more-than-expected to 1.8% month-over-month, easing concerns over the outlook for growth in the region. A 1.4% growth rate was expected.
What caused the euro to jump to an early session high of 1.3698 from 1.3648 were upbeat comments from the European Central Bank’s Governing Council member Ewald Nowotny who said economic growth in the Eurozone may exceed expectations in 2014.
The euro ended the session with a 0.03% gain versus the dollar to 1.3666. Against the yen, the euro gained 0.2% to 141.63.
The US dollar bounced against the yen today after falling the previous two days, recovering over 80 pips from Monday’s low when the pair was hurt by disappointing US nonfarm payrolls. The pair traded the second half of the European session above 103.50 reaching highs of 103.75 after solid US retail sales data. December sales rose more-than-expected by 0.2% versus 0.1% forecast.
The dollar gained 0.2% against the yen to 103.65.
Meanwhile, weak fundamentals are weighing on the Japanese yen after data today showed a record deficit in Japan’s current account in November.
Looking ahead to the US session, focus will be on two speakers from the Federal Reserve – Charles Plosser, president of the Philadelphia Fed, and Richard Fischer, Dallas Fed President. This comes after Friday’s disappointing nonfarm payrolls, so as investors are still digesting the news, there will be interest in what the two Fed governors made of the data and if it will affect the pace of tapering from the Fed.
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