Euro Falls After Eurozone Growth Outlook Downgrade
07 February 2019 - 5:54PM
RTTF2
The euro fell sharply against its major opponents in the
European session on Thursday, after the European Commission slashed
Eurozone growth forecast amid rising uncertainty regarding trade
policies, particularly between the US and China.
The euro area GDP growth forecast was cut to 1.3 percent for
2019, from previous estimate of 1.9 percent.
For 2020, Eurozone growth outlook was revised down to 1.6
percent, from 1.7 percent estimated in autumn forecast.
The EU GDP growth forecast was also trimmed to 1.5 percent for
2019 and 1.7 percent for 2020, from 1.9 percent and 1.8 percent,
respectively.
The EC said that the downgrade reflected external factors, such
as trade tensions and the slowdown in emerging markets, notably in
China.
Preliminary figures from the Federal Statistical Office showed
that Germany's industrial production decreased for a fourth
consecutive month in December, defying expectations for an
increase.
Industrial production fell a calendar and seasonally-adjusted
0.4 percent from November, when it decreased 1.3 percent, revised
from 1.9 percent. Economists had expected a 0.8 percent
increase.
The currency was trading mixed against its major counterparts in
the Asian session. While it fell against the pound and the yen, it
held steady against the greenback and the franc.
The euro declined to near a 2-week low of 1.1332 against the
greenback, from a high of 1.1369 hit at 6:15 pm ET. The next
possible support for the euro is seen around the 1.11 level.
The single currency dropped to a 6-day low of 124.48 against the
yen and a 9-day low of 1.1358 against the franc, reversing from its
early highs of 125.07 and 1.1394, respectively. If the euro falls
further, 122.00 and 1.12 are likely seen as its next support levels
against the yen and the franc, respectively.
Following more than a 2-week high of 1.6843 seen at 12:30 am ET,
the euro reversed direction and pulled back to 1.6763 against the
kiwi. The euro is seen finding support around the 1.66 level.
The euro edged down to 1.5001 against the loonie and 1.5945
against the aussie, moving away from an early 6-day high of 1.5048
and a 2-week high of 1.6015, respectively. The euro is poised to
test support around 1.48 against the loonie and 1.57 against the
aussie.
The euro pared gains to 0.8777 against the pound, from a high of
0.8799 hit at 3:00 am ET. Further downtrend may take the euro to a
support around the 0.86 region.
Looking ahead, at 7:00 am ET, the Bank of England announces its
decision on interest rate. Economists expect the benchmark rate to
remain at 0.75 percent and asset purchase facility at GBP 435
billion.
In the New York session, U.S. weekly jobless claims for the week
ended February 2 and consumer credit for December are due.
At 9:30 am ET, Federal Reserve Governor Richard Clarida will
deliver a speech about the neutral interest rate at the Czech
National Bank conference in Prague.
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