Investing.com - The euro posted steep losses against its major counterparts last week, falling to multi-month lows against the U.S. dollar and the pound and an 11-year low against the yen as a combination of concerns over the deepening crisis in the euro zone and stronger-than-expected U.S. employment data weighed.
EUR/USD hit 1.2697 on Friday, the pair’s lowest since September 10 2010; the pair subsequently consolidated at 1.2717 by close of trade, falling 1.63% over the week.
The pair is likely to find support at 1.2587, the low of August 24, 2010 and resistance at 1.2812, Friday’s high.
On Friday, the U.S. Department of Labor said nonfarm payrolls increased by 200,000 in December from a downwardly revised 100,000 the previous month and surpassing expectations for a 150,000 increase. The unemployment rate unexpectedly fell to 8.5%, the lowest level since February 2009.
The strong data underlined the divergence between the embattled euro zone and the more buoyant U.S. economy and boosted the greenback across the board.
Sentiment on the single currency was hit by concerns over the sovereign funding needs of euro zone states, after France sold EUR4.02 billion of 10-year bonds in an auction Thursday, which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s in December, amid concerns over the handling of the financial crisis in the euro zone.
The French auction came one day after an auction of German 10-year government debt which encountered lower than average investor demand.
Elsewhere, Italian 10-year bond yields remained close to the critical 7% threshold, seen as unsustainable in the long term, despite ongoing bond purchases by the ECB.
Meanwhile, fears over the strength of the euro zone’s banking sector intensified after a report on Thursday showed that overnight deposits at the European Central Bank reached a new record high of EUR455 billion, indicating that European banks remain unwilling to lend to each other.
On Friday, Japanese Finance Minister Jun Azumi warned that the euro’s increasing weakness against the yen is a threat to Japan’s economy and should be carefully monitored.
In the week ahead, investors will be closely watching a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel on Monday for any signs of progress in resolving the region’s two-year old debt crisis.
France, Greece, Germany, Italy and Spain are all scheduled to hold auctions of government debt, while the ECB is to hold its first policy-setting meeting of the New Year.
Also next week, the U.S. is to publish official data on retail sales and consumer sentiment.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 9
In the euro zone, a report is to be released on investor confidence in the single currency bloc, as well as data on German industrial production, a leading indicator of economic health.
Also Monday, Federal Open Market Committee member Dennis Lockhart is to speak.
Tuesday, January 10
The euro zone is to publish an official report on French industrial production, a leading indicator of economic health.
In the U.S., FOMC members John Williams and Sandra Pianalto are to speak.
Wednesday, January 11
The U.S. is to produce official data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book. In addition, FOMC member Dennis Lockhart is to speak.
Thursday, January 12
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement will be followed by a closely watched press conference, as investors remain focused on the region's financial crisis.
Later Thursday, the U.S. is to release official data on retail sales and initial jobless claims. The country is also to publish government data on business inventories, a signal of future business spending, followed by a report on the federal budget balance.
Friday, January 13
The U.S. is to round up the week with data on the trade balance, as well as government data on import prices. In addition, the University of Michigan is to release preliminary data on inflation expectations and consumer sentiment, a leading indicator of consumer spending.
EUR/USD hit 1.2697 on Friday, the pair’s lowest since September 10 2010; the pair subsequently consolidated at 1.2717 by close of trade, falling 1.63% over the week.
The pair is likely to find support at 1.2587, the low of August 24, 2010 and resistance at 1.2812, Friday’s high.
On Friday, the U.S. Department of Labor said nonfarm payrolls increased by 200,000 in December from a downwardly revised 100,000 the previous month and surpassing expectations for a 150,000 increase. The unemployment rate unexpectedly fell to 8.5%, the lowest level since February 2009.
The strong data underlined the divergence between the embattled euro zone and the more buoyant U.S. economy and boosted the greenback across the board.
Sentiment on the single currency was hit by concerns over the sovereign funding needs of euro zone states, after France sold EUR4.02 billion of 10-year bonds in an auction Thursday, which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s in December, amid concerns over the handling of the financial crisis in the euro zone.
The French auction came one day after an auction of German 10-year government debt which encountered lower than average investor demand.
Elsewhere, Italian 10-year bond yields remained close to the critical 7% threshold, seen as unsustainable in the long term, despite ongoing bond purchases by the ECB.
Meanwhile, fears over the strength of the euro zone’s banking sector intensified after a report on Thursday showed that overnight deposits at the European Central Bank reached a new record high of EUR455 billion, indicating that European banks remain unwilling to lend to each other.
On Friday, Japanese Finance Minister Jun Azumi warned that the euro’s increasing weakness against the yen is a threat to Japan’s economy and should be carefully monitored.
In the week ahead, investors will be closely watching a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel on Monday for any signs of progress in resolving the region’s two-year old debt crisis.
France, Greece, Germany, Italy and Spain are all scheduled to hold auctions of government debt, while the ECB is to hold its first policy-setting meeting of the New Year.
Also next week, the U.S. is to publish official data on retail sales and consumer sentiment.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 9
In the euro zone, a report is to be released on investor confidence in the single currency bloc, as well as data on German industrial production, a leading indicator of economic health.
Also Monday, Federal Open Market Committee member Dennis Lockhart is to speak.
Tuesday, January 10
The euro zone is to publish an official report on French industrial production, a leading indicator of economic health.
In the U.S., FOMC members John Williams and Sandra Pianalto are to speak.
Wednesday, January 11
The U.S. is to produce official data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book. In addition, FOMC member Dennis Lockhart is to speak.
Thursday, January 12
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement will be followed by a closely watched press conference, as investors remain focused on the region's financial crisis.
Later Thursday, the U.S. is to release official data on retail sales and initial jobless claims. The country is also to publish government data on business inventories, a signal of future business spending, followed by a report on the federal budget balance.
Friday, January 13
The U.S. is to round up the week with data on the trade balance, as well as government data on import prices. In addition, the University of Michigan is to release preliminary data on inflation expectations and consumer sentiment, a leading indicator of consumer spending.