RTTN:Euro Pares Gains After Eurozone Unemployment, Inflation Data
The euro fell in early deals on Wednesday despite the official data confirmed the eurozone unemployment and inflation remained stable in June, offsetting gains following upbeat German labor market figures.
The euro area unemployment rate remained stable at seasonally adjusted 12.1 percent in June, following previous month's revised decrease of 12.1 from originally estimated 12.2 percent. The number of unemployed decreased by 24 000 to 19.266 million in June.
A separate flash report from Eurostat showed that inflation held steady at 1.6 percent in July, in line with economists' expectations. At the same time, core inflation slowed moderately to 1.1 percent from 1.2 percent in the previous month. The final report is due on August 16.
The common currency outperformed earlier in the session as German unemployment declined in July. The number of unemployed fell by 7,000 persons in July from a month earlier. Economists had forecast no change in the unemployment figure. The seasonally adjusted unemployment rate was 6.8 percent in July, unchanged from June's 6.8 percent.
The Federal Statistical Office data showed Germany's unemployment rate remained unchanged at adjusted 5.4 percent in June. At the same time, the number of employed rose by 10,000 in June compared with the previous month.
Meanwhile, the German retail sales declined unexpectedly in June to a seasonally and calendar adjusted 1.5 percent month-on-month in real terms, reversing a 0.7 percent gain in May and a 0.3 percent increase in April. This was in contrast to economists' expectation for a 0.2 percent growth.
On an annual basis, retail sales shrank 2.8 percent in real terms against forecast for a 0.5 percent increase. This followed 0.8 percent increase in May and 3.4 percent rise in April.
The real risk event today will be the U.S. Federal Reserve policy statement, which is due later in the global day. With the U.S. economy showing mixed signals of improvement, the Fed is not expected to announce any immediate change in its monetary policy. Nevertheless, investors are waiting for a definite answer from the Fed on when it would start tapering its massive bond-buying program.
The European Central Bank and the Bank of England are also expected to reaffirm their commitment to lower interest rates for a prolonged period when the central banks meet tomorrow to take a decision on interest rates and monetary policy.
Elsewhere, Switzerland's leading economic indicator gained for the fourth consecutive month in July to 1.23 points, the KOF Economic Institute showed today, marginally above the consensus 1.22.
Switzerland's UBS consumption indicator decreased moderately to 1.44 in June, slightly lower than the previous month's score of 1.45, which was revised down from 1.46.
Japan's housing starts as well as construction orders registered double-digit growth in June, with the former rising 15.3 percent year-on-year in June, faster than the 14.5 percent rise in May and the latter climbing 21.9 percent from a year ago.
The euro dropped to 129.56 against the yen around 6:10 am ET, its weakest level since July 15. The 50-day simple moving average level has broken in the pair around 129.65 and its next likely support is seen around the 128.50 level, its 100-day SMA.
The single currency eased to 0.8720 against the pound around 6:20 am ET, having retreated from 0.8736 hit around 4:40 am ET, a level not seen since March 13. Further bearish extension could help the pair revisiting the key 0.87 support in the near-term.
The common currency fell to 1.2304 against the Swiss franc around 4:50 am ET, its lowest level since July 03. With the pair breaking below its 100-day simple moving average level at 1.2309, the next likely support for the currency cross is seen around the 1.2245/50 area, its 200-day SMA.
The euro also slipped to 1.3254 against the US dollar around 6:30 am ET from a session's high of 1.3299. The failed test of 1.33 resistance for the euro-buck pair in the second consecutive session suggest some near-term bearish outlook, with 1.3230 seen as the next likely support level.
Looking ahead, the US ADP employment change for July and the gross domestic product for the second quarter and the Chicago purchasing manager index for July will be closely watched ahead of the all-important U.S. FOMC rate decision.
