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Euro Down Following German CPI
www.investing.com/analysis/fundamental/euro-down-following-german-cpi-7247
Euro Down Following German CPI
By CEP News | May 27, 2008 08:00PM ET The euro was generally down on Wednesday, maintaining a downward trend against crosses following soft data in the overnight.
The euro was down 0.0065 to 1.5627 against the American dollar and down 0.0132 to 1.5464 against the Canadian dollar.
Against the loonie, the euro began its session-long descent after the European Central Bank announced at 4:00 a.m. EDT that the euro zone's current account fell into deficit territory with a reading of -€15.3 billion in March following the previous month's €7.5 billion trade surplus. At the time the data was released, the EUR/CAD had been at a session-high 1.567.
TD Securities chief currency strategist Shaun Osborne was holding out for a further drop lower for the EUR/CAD.
"This cross' attempt at extending its recent consolidation into an all-out rally appears to have failed; it may prove terminal," he commented. "After making a move through resistance in the low 1.55 area earlier this week, which implied upside potential to the 1.58 area, the market failed to hold on to the gains through the short-term moving averages (11 and 21-day) that have proved to be a good guide to recent price trends."
"The market may also post a bearish outside range session today and, with the cross easing back under the short terms MAs, the downside could open up again quite quickly for the cross. New lows are needed to confirm the more negative prospects. Look for modest support now around the 1.5400/10 area."
The pound sterling was up 0.0073 to 1.2671 against the euro, which in turn was up 0.08 points to 163.65 against the yen.
After rising to a session high of 164.48 on U.S. durable goods orders against the yen, the euro began decreasing with the release of German CPI data, which rose 0.6% in May month-over-month. Economists had expected an inflation growth rate of 0.4%. Year-over-year, it increased 3.0%. Prior to the German release, Capital Economics' Jennifer McKeown had anticipated a relatively inline 3.1% increase.
"For the time being, today's data suggest that euro zone inflation (released this Friday) will have risen a little further in May from April's already high rate of 3.3%. Such an outcome would leave the ECB in a distinctly hawkish mood," she wrote.
All data taken at 1:14 p.m. EDT.
By Ryan Szporer
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Euro Down Following German CPI
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