Investing.com - The euro fell to an eleven-month low against the U.S. dollar on Friday, as market sentiment came under pressure after ratings agency Standard and Poor’s downgraded nine countries in the euro zone, including France.
EUR/USD hit 1.2623 on Friday, the pair’s lowest since August 31, 2010; the pair subsequently consolidated at 1.2678 by close of trade Friday, shedding 0.12% over the week.
The pair is likely to find support at 1.2623, Friday’s low and resistance at 1.2946, the high of January 5.
The euro fell more than 1% against the greenback on Friday after S&P cut ratings on Italy, Spain, Cyprus and Portugal by two notches and downgraded Malta, Slovakia and Slovenia by one level. Germany kept its triple-A rating.
French Finance Minister Francois Baroin said the loss of the triple-A rating was "not a catastrophe'' and stressed that France still had a solid AA+ rating.
Earlier Friday, a closely watched auction of Italian government debt met with weak investor demand, one day after an auction of Spanish government debt met with solid investor demand at sharply lower yields.
Meanwhile, talks aimed at negotiating a restructuring of Greece's debts broke down on Friday, amid disagreements over how much money investors will lose by swapping their bonds, raising fears over a possible default.
German Chancellor Angela Merkel said Saturday that the downgrades demonstrated the importance of the rapid implementation of a pact to reinforce fiscal discipline across the euro zone and added that the region’s permanent bailout facility, the European Stability Mechanism, should be funded soon.
The single currency strengthened broadly on Thursday after European Central Bank President Mario Draghi said the bank saw signs of stabilization in the region’s economy, adding that the central bank’s recent refinancing operation had made a substantial contribution to improving the funding situation for banks.
The comments came after the ECB left the benchmark interest rate unchanged at 1.0%.
Also Thursday, official data showed that industrial production in the euro zone declined for the third consecutive month in November.
In the U.S., data showed that the number of people who filed for unemployment assistance in the U.S. last week unexpectedly rose to 399,000 from 375,000 the previous week.
A separate report showed that U.S. retail sales rose less-than-expected in December.
In the week ahead, investors will be keeping a close eye on developments in the euro zone, amid concerns over the increased risk of sovereign debt contagion, while investors will also be looking ahead to U.S. data on inflation and the housing sector.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 16
In the euro zone, ECB President Mario Draghi is due to testify before the European Parliament's Economic and Monetary Affairs Committee.
Also Monday, markets in the U.S. are to remain closed for a national holiday.
Tuesday, January 17
The euro zone is to produce a report on the German ZEW economic sentiment index, a leading indicator of economic health, as well as reports on consumer price inflation and the ZEW index of economic sentiment in the single currency area.
Meanwhile, the U.S. is to publish the Empire State Manufacturing index, an important gauge of economic health.
Wednesday, January 18
The U.S. is to release government data on producer price inflation, followed by data on net foreign purchases of long-term securities, which is the balance of domestic and foreign investment. The Federal Reserve is also to produce its capacity utilization rate, a key gauge of consumer inflation, as well as data on industrial production. The country is also to publish official data on crude oil inventories.
Thursday, January 19
In the euro zone, the ECB is to produce a report on the current account, followed by the central bank’s monthly bulletin.
The U.S. is to publish government data on building reports, an excellent gauge of future construction activity, as well as a government report on consumer price inflation. Later in the day, the U.S. Department of Labor is to release data on unemployment claims, followed by official data on housing starts and a separate report on manufacturing activity in the Philadelphia area.
Friday, January 20
The euro zone is to produce data on German producer price inflation.
The U.S. is to round up the week with a report by the National Association of Realtors on existing home sales, an important gauge of economic health.
EUR/USD hit 1.2623 on Friday, the pair’s lowest since August 31, 2010; the pair subsequently consolidated at 1.2678 by close of trade Friday, shedding 0.12% over the week.
The pair is likely to find support at 1.2623, Friday’s low and resistance at 1.2946, the high of January 5.
The euro fell more than 1% against the greenback on Friday after S&P cut ratings on Italy, Spain, Cyprus and Portugal by two notches and downgraded Malta, Slovakia and Slovenia by one level. Germany kept its triple-A rating.
French Finance Minister Francois Baroin said the loss of the triple-A rating was "not a catastrophe'' and stressed that France still had a solid AA+ rating.
Earlier Friday, a closely watched auction of Italian government debt met with weak investor demand, one day after an auction of Spanish government debt met with solid investor demand at sharply lower yields.
Meanwhile, talks aimed at negotiating a restructuring of Greece's debts broke down on Friday, amid disagreements over how much money investors will lose by swapping their bonds, raising fears over a possible default.
German Chancellor Angela Merkel said Saturday that the downgrades demonstrated the importance of the rapid implementation of a pact to reinforce fiscal discipline across the euro zone and added that the region’s permanent bailout facility, the European Stability Mechanism, should be funded soon.
The single currency strengthened broadly on Thursday after European Central Bank President Mario Draghi said the bank saw signs of stabilization in the region’s economy, adding that the central bank’s recent refinancing operation had made a substantial contribution to improving the funding situation for banks.
The comments came after the ECB left the benchmark interest rate unchanged at 1.0%.
Also Thursday, official data showed that industrial production in the euro zone declined for the third consecutive month in November.
In the U.S., data showed that the number of people who filed for unemployment assistance in the U.S. last week unexpectedly rose to 399,000 from 375,000 the previous week.
A separate report showed that U.S. retail sales rose less-than-expected in December.
In the week ahead, investors will be keeping a close eye on developments in the euro zone, amid concerns over the increased risk of sovereign debt contagion, while investors will also be looking ahead to U.S. data on inflation and the housing sector.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 16
In the euro zone, ECB President Mario Draghi is due to testify before the European Parliament's Economic and Monetary Affairs Committee.
Also Monday, markets in the U.S. are to remain closed for a national holiday.
Tuesday, January 17
The euro zone is to produce a report on the German ZEW economic sentiment index, a leading indicator of economic health, as well as reports on consumer price inflation and the ZEW index of economic sentiment in the single currency area.
Meanwhile, the U.S. is to publish the Empire State Manufacturing index, an important gauge of economic health.
Wednesday, January 18
The U.S. is to release government data on producer price inflation, followed by data on net foreign purchases of long-term securities, which is the balance of domestic and foreign investment. The Federal Reserve is also to produce its capacity utilization rate, a key gauge of consumer inflation, as well as data on industrial production. The country is also to publish official data on crude oil inventories.
Thursday, January 19
In the euro zone, the ECB is to produce a report on the current account, followed by the central bank’s monthly bulletin.
The U.S. is to publish government data on building reports, an excellent gauge of future construction activity, as well as a government report on consumer price inflation. Later in the day, the U.S. Department of Labor is to release data on unemployment claims, followed by official data on housing starts and a separate report on manufacturing activity in the Philadelphia area.
Friday, January 20
The euro zone is to produce data on German producer price inflation.
The U.S. is to round up the week with a report by the National Association of Realtors on existing home sales, an important gauge of economic health.