Euro drops to two-week low over fears of weak eurozone confidence

<p>The euro traded down a further 40 pips during last night’s Asian session, touching two-week lows of 1.2868 against the dollar following a string of […]</p>

The euro traded down a further 40 pips during last night’s Asian session, touching two-week lows of 1.2868 against the dollar following a string of weak economic data and increased eurozone uncertainty. This was also following news that Germany, the Netherlands and Finland issued a joint declaration that appeared to unravel much of what was agreed at the last European summit in June regarding the recapitalization of banks. Similarly sterling and Australian dollar continued to weaken from yesterday’s highs of 1.6265 and 10460, printing  two-week lows of 1.6150 and 1.0346 in the early hours of this morning. The sell-off in the aussie dollar was prompted by a downgrade in South Australia’s rating by S&P from AA+ to AA, however outlook was maintained as stable.

Data released yesterday afternoon showed that confidence among US consumers is growing with a better than expected consumer confidence figure of 70.3, expected 63.1. However, the American optimism seems confined to the US as tomorrow at 9am the European Commission will publish consumer confidence data from the euro area, which is generally expected to drop to -25.9, the lowest since May 2009.

Today we have Italian Retail sales due at 9.00am as well as German CPI data around midday, however the main focus continues to be on Spain’s rising bond yields and the increased pressure from Spain’s bailout uncertainties.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.