European Session – Euro tumbles on soft German CPI, dollar up after US GDP data
January 30, 2014 2:43 pm
It was a busy day in the currency markets, with several data releases causing volatility. The main mood was risk-off as soft China PMI data today gave investors a fresh excuse to move out of risk.
The euro was sold off early in the European session, falling below the key 1.36 level, kept under pressure by a firmer dollar. Despite the better German employment numbers which showed the number of jobless fell more than forecast by 28,000 to 2.93 million, it was the softer-than-expected CPI across Germany that dented sentiment in the euro.
Germany’s annual inflation rate held steady in January at 1.2%, less-than-expectations for a slight acceleration. This raises pressure on the European Central Bank to take more action to counter the threat of deflation in Europe. Some are concerned one of these ECB measures could be a rate cut. Meanwhile, focus will now turn to the Eurozone CPI numbers and unemployment on Friday.
The euro tumbled to as low as 1.3566 from the session open of 1.3655 and ended the session with a 0.51% loss at 1.3584. Against the yen, the euro lost 0.09% to 139.82.
The pound followed the euro lower to drop over 100 pips to 1.6444 but managed to recover half of these losses to end the session at 1.6506 with a 0.30% loss.
The dollar gained versus the yen, up 0.28% to 102.69, helped higher after US fourth quarter GDP data. The numbers were in line with forecasts of a 3.2% growth rate. The fact that the number was not worse led investors to be more positive about the US economic outlook and pushed them to buy the dollar back. The report showed that robust household spending and rising exports kept the US economy on solid ground in the last quarter of 2013, giving optimism for further growth. This would support the Fed’s view that the economic recovery is on track and hence justify its decision to continue with tapering at its policy meeting on Wednesday.
The GDP data overshadowed the dim US jobless claims report. The number of Americans filing for first time unemployment claims rose by 19,000 in the prior week to 348,000, missing expectations of 330,000.
Upcoming US data will be on pending home sales for December. Friday’s University of Michigan consumer sentiment and US personal spending will also be risk events for the dollar.
It was a busy day in the currency markets, with several data releases causing volatility. The main mood was risk-off as soft China PMI data today gave investors a fresh excuse to move out of risk.
The euro was sold off early in the European session, falling below the key 1.36 level, kept under pressure by a firmer dollar. Despite the better German employment numbers which showed the number of jobless fell more than forecast by 28,000 to 2.93 million, it was the softer-than-expected CPI across Germany that dented sentiment in the euro.
Germany’s annual inflation rate held steady in January at 1.2%, less-than-expectations for a slight acceleration. This raises pressure on the European Central Bank to take more action to counter the threat of deflation in Europe. Some are concerned one of these ECB measures could be a rate cut. Meanwhile, focus will now turn to the Eurozone CPI numbers and unemployment on Friday.
The euro tumbled to as low as 1.3566 from the session open of 1.3655 and ended the session with a 0.51% loss at 1.3584. Against the yen, the euro lost 0.09% to 139.82.
The pound followed the euro lower to drop over 100 pips to 1.6444 but managed to recover half of these losses to end the session at 1.6506 with a 0.30% loss.
The dollar gained versus the yen, up 0.28% to 102.69, helped higher after US fourth quarter GDP data. The numbers were in line with forecasts of a 3.2% growth rate. The fact that the number was not worse led investors to be more positive about the US economic outlook and pushed them to buy the dollar back. The report showed that robust household spending and rising exports kept the US economy on solid ground in the last quarter of 2013, giving optimism for further growth. This would support the Fed’s view that the economic recovery is on track and hence justify its decision to continue with tapering at its policy meeting on Wednesday.
The GDP data overshadowed the dim US jobless claims report. The number of Americans filing for first time unemployment claims rose by 19,000 in the prior week to 348,000, missing expectations of 330,000.
Upcoming US data will be on pending home sales for December. Friday’s University of Michigan consumer sentiment and US personal spending will also be risk events for the dollar.
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