Euro, Pound Drop On Evergrande Default Fears
The euro and the pound fell against their major counterparts
during the European session on Monday, as European shares dropped
on fears over the impact of potential fallout of Chinese company
Evergrande on the broader economy.
The property giant's shares fell as it has defaulted interest
payments on bank loans, intensifying fears about a credit crunch in
the world's second largest economy.
The Fed's monetary policy decision is due this week, with
markets seeking more clues about the withdrawal of the QE
Fed Chair Jerome Powell said that the tapering could happen this
year depending upon the strengthening of the economy.
Other major central banks due to hold monetary policy meeting
this week include the Bank of Japan, the Bank of England and the
Swiss National Bank.
Data from Destatis showed that Germany's producer prices
increased in August at the fastest pace since 1974.
Producer price inflation rose to 12 percent in August from 10.4
percent in July. This was the biggest growth since December 1974,
when prices were up 12.4 percent amid the first oil crisis.
The euro depreciated to a 4-day low of 1.0897 against the franc,
4-week low of 1.1700 against the greenback and more than a 4-week
low of 128.27 against the yen, down from its previous highs of
1.0935, 1.1731 and 129.03, respectively. The euro is seen finding
support around 1.06 against the franc, 1.15 against the greenback
and 126.00 against the yen.
The euro pulled back to 1.6657 against the kiwi, from a high of
1.6704 set at 3 am ET. On the downside, 1.65 is likely seen as its
next support level.
In contrast, the euro rose to 1.5034 against the loonie, its
biggest level since September 9. Immediate resistance awaits near
the 1.52 level.
The euro jumped to more than a 3-week high of 1.6205 against the
aussie in the previous session and held steady since then. The pair
had ended Friday's deals at 1.6132.
The pound was lower at 4-week lows of 1.3662 against the
greenback and 149.72 against the yen, off its early highs of 1.3750
and 151.15, respectively. The currency may locate support around
1.34 against the greenback and 146.00 against the yen.
Retreating from its previous highs of 0.8525 against the euro
and 1.2810 against the franc, the pound slipped to near a 2-week
low of 0.8571 and a 4-day low of 1.2726, respectively. If the pound
slides further, it may find support around 0.87 against the euro
and 1.25 against the franc.
Looking ahead, U.S. NAHB housing market index for September is
scheduled for release in the New York session.
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