Euro Falls Amid Risk Aversion
October 30 2014 - 8:25AM
RTTF2
The euro weakened against other major currencies in the European
session on Thursday amid risk aversion, as investors' sentiment
declined after the Federal Reserve delivered a slightly more
hawkish policy statement, prompting traders to offload
positions.
The U.K.'s FTSE 100 index is currently down 0.77 percent or
49.61 points at 6,404; France's CAC 40 index is down 0.60 percent
or 24.73 points at 4,085, and Germany's DAX is down 0.86 percent or
78.21 points at 9,004.
After ending its controversial long-running bond-buying program,
the Federal Reserve described labor conditions as improving and
sounded more hawkish than expected on inflation, signaling its
intent that it is prepared to raise interest rates next year if the
economic recovery continues to gather steam.
The hawkish tone by Fed policymakers bolstered the appeal of
dollar and put downward pressure on commodities such as copper,
crude and gold. The major U.S. averages saw considerable volatility
before closing marginally lower overnight, as the Fed policy
statement retained its "considerable time" phrasing.
Investors, who are also focusing on the geopolitical events
after the North Atlantic Treaty Organization, said that there has
been an "unusual" increase in the number of Russian military
flights over European airspace in the last two days. In news out of
Iraq, U.S.-led forces carried out a total of eight airstrikes
targeting Islamic State of Iraq and the Levant (ISIL) terrorists in
Syria in the last 48 hours using fighter and bomber aircraft, the
U.S. military said.
Investors also look ahead to data on U.S. third-quarter gross
domestic product and jobless claims due later in the day for
further clues on whether the U.S. economy can maintain its positive
momentum without the aid of stimulus programs.
In the economic news, data from European Commission showed that
Eurozone economic confidence picked up in October from a 10-month
low. The economic confidence index rose unexpectedly to 100.7 in
October from 99.9 in the prior month. The score was expected to
fall to 99.7.
Data from Federal Labor Agency showed that German unemployment
declined unexpectedly in October. The number of people out of work
decreased by 22,000 to 2.88 million in October. Economists had
forecast an increase of 4,000.
In the Asian trading, the Euro was slightly higher against most
major currencies.
In the European trading, the Euro fell to a 1-1/2 month low of
1.4288 against the Australian dollar, from an early high of 1.4411.
The euro is likely to find support around the 1.40 region.
Against the U.S. and the Canadian dollars, the euro fell to
nearly 4-week lows of 1.2554 and 1.4068 from early highs of 1.2638
and 1.4142, respectively. If the euro extends its downtrend, it is
likely to find support around the 1.24 against the greenback and
1.39 against the loonie.
The euro slipped to a 3-day low of 0.7862 against the pound and
a 2-day low of 137.03 against the yen, from early highs of 0.7904
and 137.71, respectively. On the downside, 0.77 against the pound
and 135.12 against the yen are seen as the next support level for
the euro.
Against the Swiss franc, the euro edged down to 1.2054 from an
early 2-day high of 1.2064. The euro may test support near the
1.204 region.
Eurozone business climate indicator index and economic
confidence index for October and German CPI data for October are
due to be released.
At 9:00 am ET, U.S. Federal Reserve Chair Janet Yellen will
deliver opening remarks at the Board of Governors of the Federal
Reserve System's National Summit on Diversity in the Economics
Profession in Washington DC.
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