Forex - EUR/USD dips on fears European economy still contracting

Published 11/14/2012, 08:30 PM
Updated 11/14/2012, 08:31 PM
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Investing.com - The euro slid against the dollar on Thursday ahead of the release of the currency bloc's preliminary third quarter gross domestic product, which may show the eurozone continues to contract.

Soft European industrial output numbers sent the pair falling as well.

In Asian trading on Thursday, EUR/USD was trading down 0.05% at 1.2729, up from a session low of 1.2718, and off from a high of 1.2731.

The pair was likely to find support at 1.2704, Wednesday's low, and resistance at 1.2776, Wednesday’s high.

In the eurozone earlier, official data revealed that industrial production declined 2.5% in September, well beyond expectations for a more modest 1.9% decline.

The numbers sparked fears that the eurozone's preliminary gross domestic product rate for the third quarter will disappoint later Thursday.

France, Germany and Italy are also to release individual GDP reports.

Meanwhile in the U.S., lackluster sales data kept investors parked in the safe-haven dollar.

The U.S. Commerce Department reported earlier that retail sales fell by a seasonally adjusted 0.3% in October, weaker than expectations for a 0.2% decline.

Core retail sales, which exclude automobile sales, came in flat last month.

Analysts were expecting core retail sales to rise 0.2% in October, after rising by an upwardly revised 1.2% in September.

Retail sales serve as a good barometer for U.S. economic health.

Meanwhile, separate data revealed that U.S. producer price inflation fell unexpectedly in October, while core prices also dipped.

The Labor Department reported that producer prices fell by a seasonally adjusted 0.2% in October, compared to expectations for a 0.2% increase, after rising 1.1% in September.

The core producer price index declined 0.2% in October, defying expectations for a 0.1% increase, after coming in September.

Ongoing uncertainty surrounding the fiscal cliff in the U.S. swayed investors away from risk as well, which bolstered the dollar against the greenback.

The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.09% at 0.8033, and EUR/JPY trading down 0.06% at 102.14.

Later Thursday, the eurozone will release official data on consumer price inflation.

Meanwhile, the European Central Bank is to publish its monthly bulletin, which looks at economic conditions from the bank’s perspective.

The U.S. is to release a flurry of data, including reports on initial jobless claims, consumer price inflation, crude oil stockpiles, in addition to data on manufacturing activity in New York and Philadelphia.








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