The euro rallied in early deals Wednesday as eurozone's better-than expected industrial production figures provided a temporary relief to the market from the clutches of bear-hugs.
Although the eurozone industrial production declined in April, it came in at a slower than expected pace, data from Eurostat showed today.
Industrial production logged a monthly fall of 0.8 percent in April after easing 0.1 percent in March. The decline was smaller than economists' expectations for a 1.2 percent drop.
Annually, industrial output dropped at a faster pace of 2.3 percent in April, following a 1.5 percent drop in March. Economists were expecting a bigger decline of 2.7 percent.
In the EU27, overall production dropped 0.4 percent month-on-month, taking the annual decrease to 1.7 percent in April.
Among the member states, industrial production fell in eleven and rose in twelve. The largest annual decreases were registered in Italy, Spain and Portugal. Meanwhile, the highest increases were seen in Slovakia, Lithuania and the Netherlands.
The European markets are in negative territory as debt worries continued to impact investor sentiment with borrowing costs increasing for Germany and Italy at debt auctions.
Germany sold 4.04 billion euros of 10-year bunds, but average yield rose to 1.52 percent from 1.47 percent in the previous sale on May 16.
Italy was successful in raising debt in line with its 6.5 billion euro-target in an auction of 12-month bills, but yield was sharply higher and demand was lower than at a previous auction.
Thus far, Germany's DAX dropped 0.61 percent, France's CAC-40 index slipped to 0.16 percent and the U.K. FTSE 100 index fell 0.20 percent.
Recovering from yesterday's multi-day lows, the euro advanced to 2-day highs of 1.2554 against the US dollar and 100.02 against the yen in early deals Wednesday. With the RSI being bearish in both pairs, odds for further gains are almost limited until the key macroeconomic data release in the North American session.
Risk-sentiment was robust in Asian deals after a report showed that the core machine orders in Japan climbed a seasonally adjusted 5.7 percent on month in April to a value of 788.6 billion yen.
That headline figure blew away forecasts for an increase of 1.6 percent following the 2.8 percent contraction in March and the 2.8 percent gain in February. Core machine orders rose for the fourth time in five months.
The common currency rose to a session's high of 0.8062 against the pound around 6:40 am ET. The euro-pound pair leveled off thereafter around the 0.8050/55 area with 0.8080 seen as the probable resistance and 0.8010 seen as the likely support.
The euro jumped to a 2-day high of 1.2016 against the Swiss franc in early deals but the move was not so significant as the pair remained in recent ranges. The euro-franc pair has been trading in a range of 1.2023 and 1.2012 thus far this month.
Swiss producer and import prices declined more than expected by economists in May, the Federal Statistical Office said today. Year-on-year, the producer and import price index fell 2.3 percent in May, faster than economists' forecast for a 2 percent decline. Compared to the previous month, the index fell 0.2 percent, while expectations were for a 0.1 percent drop.
Looking ahead, the US retail sales, PPI-both for May and the business inventories report for April are expected to influence trading in the upcoming North American session.
by RTT Staff Writer
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