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Euro Falls On German Industrial Production; Focus Greek Parliamentary Vote

11/7/2012 7:54 AM ET

The euro has been weakening against other major currencies on Wednesday following a report showed that German industrial production fell more than forecast in September. The sentiment was also undermined ahead of Greek Parliamentary vote on more austerity measures today.

Germany's industrial production declined 1.8 percent in September from a month ago, the Federal Ministry of Economics and Technology said today. It follows a slower 0.4 percent drop in August and exceeded a 0.7 percent decline forecast by economists.

Industrial production adjusted for working days, slipped unexpectedly by 1.2 percent annually after falling 1.3 percent in August. Economists had forecast output to grow 0.1 percent.

The European Commission today downgraded Eurozone's economic outlook as deep financial and sovereign debt crisis continue to weigh on economic activity.

The region to gradually return to growth in the first half of 2013, the commission said in its Autumn economic forecast. Despite large divergence across member states, the euro area will grow 0.1 percent next year, it said.

The GDP projection for 2013 was downgraded from the 1 percent growth estimated in Spring forecast.

The commission forecasts the region to shrink 0.4 percent this year compared to the prior forecast of 0.3 percent fall.

Investors also became cautious ahead of today's Greek Parliamentary vote for spending cuts and tax hikes totaling 13.5 billion euros, which is vital for the country to get next tranche of aid from international creditors. Greeks unions has called for 48-hour general strike to protest against the vote in favor of the budget for 2013.

The euro is now trading at 102.51 against the yen, compared to an early 5-day high of 103.44. If the euro falls further, it may break 102.00 level.

Against the greenback, the euro is worth 1.2794, reversing from a 5-day high of 1.2877 hit around 2:35 am ET. The next support level for the euro-greenback pair is seen at 1.27.

After hitting a 5-day high of 1.2092 against the franc, the euro fell. The euro is now trading at 1.2072 against the franc with 1.20 seen as the next support level.

Switzerland's consumer prices decreased from last year in October, and the rate of fall matched economists' expectations, data released by the statistical office showed today.

The consumer price index declined 0.2 percent on an annual basis in October, in line with economists' expectations. The rate of decrease was slower than 0.4 percent recorded in September.

The European currency that retreated from a 6-day high of 0.8033 against the pound is presently worth 0.7999. On the downside, the euro is likely to breach 0.795 level.

Erasing Asian session's gains, the euro declined to 1.2239 against the aussie, its lowest level since September 7. The euro may find next support level at 1.22.

The rate of contraction in Australia's construction sector activity eased in October, a survey by Australian Industry Group and the Housing Industry Association showed today.

The AiG/HIA performance of construction index rose to 35.8 in October from 30.9 in the previous month. However, the index reading below 50 suggested a solid deterioration in business operating conditions.

The euro that eased from an early 2-day high of 1.5563 against the NZ dollar dipped to 1.5424, its weakest level since August 27. The euro-kiwi pair is likely to test support at 1.54.

The euro also lost ground against the Canadian dollar, hitting more than a 3-week low of 1.2675. The next downside target level for the euro-loonie pair is seen at 1.26.

Looking ahead, the U.S. consumer credit and the weekly crude oil inventories are due in the North American session.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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