Euro broadly lower as growth concerns dominate

Published 08/10/2012, 07:29 AM
Updated 08/10/2012, 07:31 AM
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Investing.com - The euro was broadly lower against the other major currencies on Friday, as risk sentiment weakened amid worries over the outlook for global economic growth and uncertainty over the possibility for fresh action by the European Central Bank to boost the economy in the euro zone.

During European afternoon trade, the euro was down against the U.S. dollar, with EUR/USD falling 0.28% to 1.2272.

Markets were jittery as expectations that the ECB will soon move to lower high Spanish and Italian borrowing costs began to wane in the absence of more details on the bank’s proposed bond buying program to emerge.

The euro also remained under pressure after the ECB said in its monthly bulletin on Thursday that the economic outlook for the euro zone faced a number of downside risks, with financial market tensions and their potential impact on growth posing the key threats.

The ECB revised down its forecast for economic growth to 0.6% in 2013, down from 1% previously and forecast a 0.3% contraction in growth this year, slightly worse than its previous forecast of for a 0.2% contraction.

Adding to growth concerns, official data showed earlier that China's trade surplus narrowed in July to USD25.1 billion from a USD31.7 billion surplus the previous month, dissapointing expectations for the surplus to widen to USD35.1 billion.

Meanwhile, the greenback remained supported after Thursday's strong U.S. economic data dampened speculation that the Federal Reserve may announce a third round of quantitative easing in the near future.

The single currency was fractionally lower against the pound, with EUR/GBP easing 0.08% to trade at 0.7863.

Official data showed earlier that producer price inflation input in the U.K. rose less-than-expected in July, ticking up 1.3%, after a 2.9% fall the previous month, disappoiting expectations for a 1.5% rise.

The euro was lower against the yen, with EUR/JPY down 0.45% to 96.25, and steady against the Swiss franc, with EUR/CHF dipping 0.01% to 1.2009.

The shared currency was mixed against the Australian, Canadian and New Zealand dollars, with EUR/AUD rising 0.30% to 1.1667, EUR/CAD losing 0.06% to trade at 1.2191 and EUR/NZD inching up 0.01% to hit 1.5157.

Earlier in the day, the Reserve Bank of Australia raised its 2012 growth forecast on stronger-than-expected household demand, while saying the sustained currency strength could prove more of a drag on the economy than in the past.

Later Friday, the U.S. was to release official data on import prices, followed by a government report on the Federal budget balance.


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