RTTN: Euro Soars To Multi-day Highs Against Most Majors
(RTTNews) - The euro strengthened against its major opponents in early trading on Tuesday as a strong demand for the Irish bond auction alleviated investors' worries over the euro-zone debt problems. The common currency advanced to multi-day highs against the currencies of the U.K, U.S. and Switzerland.
The latest Irish bond auction, which aimed to raise EUR 1.5 billion showed some solid response from investors. The auction of 2014 attracted bids totalling EUR 2.695 billion, while the auction of 2020 bonds collected bids of EUR 2.39 billion.
In economic news, the eurozone's current account balance, which is the widest measure of the region's trade balance, recorded a deficit of EUR 4.6 billion in June, figures showed today.
A deficit means the 16-nation single currency bloc is a net importer from the rest of the world. The European Central Bank said this was smaller than the EUR 7.4 billion deficit recorded in May.
Meanwhile, the Centre for European Economic Research said today that the economic sentiment indicator for Germany in August fell to 14 from 21.2 points recorded in July. That was much severe than the expected fall to 20 points.
The euro appreciated by more than 1.1 percent to reach a 4-day high of 1.3456 against the Swiss franc by 6:30 am ET from a session's low of 1.3302. The euro-franc pair is presently worth 1.3420 with 1.3540 seen as the next likely resistance level.
Against the pound also, the euro rose to a 4-day high of 0.8250 around 4:30 am ET and this may be compared to yesterday's close of 0.8191. If the euro-pound pair strengthens further, 0.8280 is seen as the next likely resistance level. The pair is presently quoted at 0.8236.
The U.K. inflation is likely to remain above the 2% target until the end of 2011 - about a year longer than projected in May, Bank of England governor Mervyn King said in an open letter to Chancellor George Osborne today.
The Office for National Statistics said annual inflation slowed to 3.1% in July from 3.2% in June. Nonetheless, it still remains more than one percentage point above the Bank of England's 2% target, prompting the explanation from the bank chief.
On a monthly comparison, the consumer price index dropped 0.2% in July, in line with economists' forecast. In June, prices edged up 0.1%.
At the same time, data showed that U.K. retail price index rose at a pace of 4.8% annually in July, slower than the 5% increase in June. Consensus forecast was 4.9%.
The euro that slumped to nearly a 7-week low of 109.08 against the Japanese yen in early Asian deals bounced back and hit as high as 110.20 before reversing direction again around 6:30 am ET. The euro-yen pair that closed yesterday's deals at 109.47 is presently quoted at 109.75.
The euro advanced to a 5-day high of 1.2917 against the US dollar before paring some gains around 5:10 am ET. The euro-greenback pair, which finished Monday's deals at 1.2828, is presently quoted at 1.2859.
Looking ahead, the Commerce Department will table its report on housing starts and building permits for July at 8.30 AM ET. Economists expect that housing starts increased to 555,000 from the 549,000 reported for the previous month.
At the same time, the Labor Department will release its report on producer price index for July. Economists expect the headline index to rise by 0.2% and the core producer price index to show 0.1% growth in July.
At 9.15 AM ET, the Federal Reserve will release its report on industrial production and capacity utilization for July. Economists estimate 0.6% growth in industrial production for the month, while capacity utilization is expected to come in at 74.5%.
