Euro Advances After Positive China Data
15 May 2020 - 5:08PM
RTTF2
The euro strengthened against its most major rivals in the
European session on Friday amid risk appetite, as China industrial
production grew at a faster pace than expected in April, signaling
a gradual recovery from the impact of the coronavirus pandemic.
Sentiment was also underpinned by talk of further stimulus in
the United States and China.
The flash estimate from Eurostat showed that the euro area
economy contracted at the sharpest pace on record in the first
quarter due to the measures taken to contain the spread of
coronavirus.
Gross domestic product fell 3.8 percent sequentially in the
first quarter, in contrast to a 0.1 percent rise in the fourth
quarter of 2019.
Separate data showed that employment declined for the first time
since 2013. Employment was down 0.2 percent in the first quarter
from the previous quarter, when it was up 0.3 percent.
Year-on-year, employment growth eased to 0.3 percent from 1.1
percent in the fourth quarter. This was the lowest increase since
the first quarter of 2014.
Another report from Eurostat showed that the euro area exports
logged its biggest fall since January 2009, as Covid-19 containment
measures had a significant impact on international trade in
goods.
Exports decreased 8.9 percent on month in March. At the same
time, imports fell 9 percent, the biggest drop on record.
The euro appreciated to 0.8862 against the pound, after falling
to 0.8827 at 5:00 pm ET. The next possible resistance for the euro
is seen around the 0.90 level.
The euro edged up to 1.0820 against the greenback, from a low of
1.0793 hit at 3:00 am ET. The currency is likely to face resistance
around the 1.10 region, if it gains again.
The euro ticked up to a 2-day high of 1.0524 against the franc,
up from Thursday's closing value of 1.0513. On the upside,
resistance is likely seen near the 1.10 level.
The European currency rebounded to 1.5205 against the loonie,
from a low of 1.5156 set at 3:00 am ET. Next key resistance for the
euro is likely seen around the 1.55 level.
The single currency held steady against the aussie and the kiwi
and was trading at 1.6741 and 1.8057, respectively. This followed a
brief recovery from Asian session's multi-day lows of 1.6693
against the aussie and 1.7963 versus the kiwi for the euro. At
Thursday's close, the euro was worth 1.6715 against the aussie and
1.7995 versus the kiwi.
In contrast, the euro fell to 115.69 against the yen, compared
to Asian session's 2-day high of 116.08. The euro may face support
around the 112.00 level.
Data the Bank of Japan showed that Japan producer prices fell
1.5 percent on month in April - missing forecasts for a decline of
0.9 percent, which would have been unchanged from the March
reading.
On a yearly basis, producer prices sank 2.3 percent versus
forecasts for a decline of 1.6 percent following the 0.4 percent
drop in the previous month.
Looking ahead, U.S. retail sales and industrial production for
April, business inventories for March and University of Michigan's
preliminary consumer sentiment index for May are scheduled for
release in the New York session.
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