Euro declines against dollar with continuing concerns in eurozone
The euro reached its lowest level in almost three weeks amid a growing divide over Europe’s new bailout strategy and data that showed the region’s three year old sovereign debt crisis is weighing on its economy.
The dollar rose amid higher safe haven demand. The U.S. securities industry cancelled stocks trading today and tomorrow as Hurricane Sandy headed toward the New York City area. A collapsing Spanish economy and concerns about the effects of Hurricane Sandy gave the market two good reasons” to sell the euro. In addition the Spanish reluctance to ask for a bailout is slowly mitigating the positive euro effect of the European Central Bank’s bond-buying plan.
Retail sales in Spain slid 11 percent in September from a year ago, a report showed, and the nation’s central bank set up a so-called bad bank to buy impaired property assets. The euro touched a two-week low versus the yen after German Finance Minister Wolfgang Schaeuble rejected another Greek debt restructuring. Euro may fall further with data release of unemployment figure in Germany. The number of unemployed people in Germany rose more-than-expected in October, while the country’s jobless rate held steady, official data showed on Tuesday.
On the FX market, Cable (GBP/USD) trended lower, as a number of Bank of England speakers highlighted that last week’s GDP reading from the UK painted an artificially strong picture of the country, with the one-off boost from the Olympic period. BoE’s Bean said that there was reason for some optimism going forward, but warned against getting overexcited about the latest GDP figures, and said weak growth is possible in Q4. BoE’s Dale has also said Britain is heading into a sharp slowdown in growth as the bounce from the Olympics disappears, adding that UK growth is to be materially lower in Q4. Dale added inflation is likely to accelerate back towards 2.5% in the next few months because of the recent increases in energy prices, damaging household incomes. In terms of technical levels, supports are seen at the 55DMA line at 1.6013 and then at the 21DMA lower Bollinger level at 1.5952. On the other hand, resistance levels are seen at 1.6144/78 and 1.6218.
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