Euro Declines After Weak Spanish Inflation Data
November 27 2014 - 6:17AM
RTTF2
The euro fell against its key counterparts in European deals on
Thursday, after Spanish consumer prices fell at a
faster-than-expected rate in November, aggravating concerns about
low inflation in the euro area.
Preliminary figures from the statistical office INE showed that
the harmonized index of consumer prices, or HICP, meant for EU
comparison, dropped 0.5 percent annually after falling 0.2 percent
in October. Economists had forecast a 0.3 percent decline.
The consumer price index decreased 0.4 percent year-on-year
after falling 0.1 percent in the previous month. Economists had
expected a 0.3 percent drop. The latest fall in the CPI was the
biggest in three months.
The decline was attributed to falling commodity prices and
energy that includes electricity and petrol.
Speaking at Finnish parliament, the European Central Bank
President Mario Draghi told that the measures implemented by the
bank, such as rate cuts, targeted TLTROs, covered bond purchase
programme and asset-backed securities programme, are delivering
tangible benefits, but time is needed for the positive effects to
fully materialise.
"However, should it become necessary to further address risks of
too prolonged a period of low inflation, the Governing Council is
unanimous in its commitment to using additional unconventional
instruments within its mandate," he told. The governing council has
tasked relevant ECB staff and Eurosystem committees with the timely
preparation of further measures to be implemented, if needed, he
added.
The Governing Council will gather in Frankfurt on December
4.
Meanwhile, Eurozone economic sentiment unexpectedly improved for
a second consecutive month in November, data from the European
Commission showed.
The economic sentiment indicator rose to 100.8 from 100.7 in
October. Economists had expected the index to eased to 100.3.
Moving away from an early high of 1.2522 against the greenback,
the euro dropped to 1.2464. The next possible support for the euro
lies around the 1.23 zone.
The single currency dropped to a 2-day low of 146.42 against the
yen from an early high of 147.24. Continuation of the euro's
downtrend may take it to a support around the 145.00 region.
The euro edged down to 0.7906 against the Sterling and held
steady thereafter. If the euro continues fall, 0.78 is seen as its
next support level.
The euro neared key 1.20 zone against the franc, edging down to
1.2018. The euro is poised to violate its peg rate of 1.20 on the
downside.
The euro fell to a 3-day low of 1.5788 against the kiwi and a
2-day low of 1.4524 against the aussie, compared to Wednesday's
closing values of 1.5869 and 1.4622,respectively. The euro may find
support around 1.55 against the kiwi and 1.44 against the
aussie.
Looking, German GfK consumer sentiment index for December is due
shortly.
In the New York session, German preliminary CPI data for
November and Canadian current account data for third quarter are
due to be released.
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