Euro Drops Amid Risk Aversion

The euro weakened against the other major currencies in the early European session on Friday amid risk aversion, as investors seek to cash in on recent gains after Fed rally.

The U.K.'s FTSE 100 index is currently down 0.21 percent or 12.98 points at 6,089, France's CAC 40 index is down 0.68 percent or 31.93 points at 4,645 and Germany's DAX is down 0.70 percent or 75.67 points at 10,662.

Exporters and financial shares posted strong gains as investors pondered divergent rate policies between the Fed and the European Central Bank. The Federal Reserve announced its long-awaited rate hike, saying the economy is strong enough to withstand higher borrowing costs.

Data from the European Central Bank showed that the euro area current account surplus decreased to a seasonally adjusted EUR 20.4 billion in October from EUR 30.1 billion in September. On an unadjusted basis, the current account surplus decreased to EUR 25.9 billion in October from EUR 33.8 billion a month ago.

In the Asian session today, the euro showed mixed trading against its major rivals. While the euro held steady against the U.S. dollar, the pound and the Swiss franc, it retreated against the yen.

In the Asian trading, the euro fell to more than a 2-week low of 131.65 against the yen, from an early high of 133.76. The euro may tets support near the 129.00 region.

The Bank of Japan kept its quantitative and qualitative easing program unchanged, but announced plans to increase purchases of exchange-traded funds.

Against the pound and the Swiss franc, the euro dropped to 0.7253 and 1.0778 from early highs of 0.7278 and 1.0797, respectively. If the euro extends its downtrend, it is likely to find support around 0.70 against the pound and 1.06 against the franc.

Pulling away from an early 2-day high of 1.6219 against the NZ dollar, the euro slipped to 1.6124. On the downside, 1.58 is seen as the next support levels for the euro.

Against the U.S., the Australian and the Canadian dollars, the euro edged down to 1.0805, 1.5125 and 1.5046 from early highs of 1.0868, 1.5237 and 1.5135, respectively. The euro may test support around 1.05 against the greenback, 1.49 against the aussie and 1.48 against the loonie.

Looking ahead, Canada wholesale sales data for October and CPI data for November and Markit's flash U.S. PMI reports for December and U.S. Baker Hughes weekly rig count data are slated for release in the New York session.

At 1:00 pm ET, Richmond Federal Reserve Bank President Jeffrey Lacker is due to speak about the economic outlook for 2016 at the Charlotte Chamber of Commerce.

For comments and feedback contact: editorial@rttnews.com

Business News

Follow RTT