Forex - EUR/USD dips on U.S. data, European inflation

Published 03/14/2012, 07:59 PM
Updated 03/14/2012, 08:00 PM
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Investing.com - The euro traded lower against the dollar on Thursday in steady trading, as investors still viewed the greenback with favor in wake of recent positive economic headlines in the U.S., while weak core inflation and industrial output rates in Europe softened the euro.

In Asian trading on Thursday, EUR/USD hit 1.3019, down 0.10%, up from a session low of 1.3018 and off from a high of 1.3036.

The pair was likely to find support at 1.3011, Wednesday’s low, and resistance at 1.3191, Tuesday's high.

In the U.S., key indicators such unemployment rates and retail sales figures have come in solid recently, while the Federal Reserve on Tuesday gave a reasonably upbeat view of the U.S. economy and left interest rates unchanged.

While headwinds such as a weak housing sector, high oil prices and others face the U.S. economy, the country is moving forward.

Furthermore, the Federal Reserve made no mention of any need to consider stimulus measures like quantitative easing to jolt more life into the economy.

Under quantitative easing, the Federal Reserve floods the financial system with liquidity by buying up assets held by banks, and the dollar weakens in the process.

No mention of such policy at a recent Federal Reserve monetary policy meeting sent the dollar rising.

With less dramatic steering currents moving EUR/USD in Asia on Thursday, investors focused on Europe, where core inflation rates, which are stripped of volatile food and energy costs, came in at 1.5% in February, weaker than expected.

Headline inflation rates in Europe rose 2.7%, which were in line with expectations.

Industrial production in the eurozone rose by 0.2% in January from December, below expectations for a 0.7% gain.

The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.04% at 0.8317 and EUR/JPY up 0.12% at 109.25.

Later Thursday, the ECB is to publish its monthly bulletin, which reveals data that the bank’s Governing Board evaluated when making the latest interest rate decision.

Also on Thursday, the U.S. is to release government data on producer price inflation, a leading indicator of overall inflation, as well as official data on unemployment claims.

The country is also to produce reports on manufacturing activity in New York and Philadelphia, as well as a government report on net long-term securities transactions.






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