The euro showed mixed performance in early deals on Thursday following data showed the region's inflation slowed in April, signaling further monetary action from the European Central Bank. The market was little impressed by news that the euro area trade surplus hit a record high in March.
Eurozone inflation slowed as initially estimated to 1.2 percent in April from 1.7 percent in March, final data from Eurostat showed today. Month-on-month, prices were down 0.1 percent. Inflation remained well-below the ECB comfort zone of 2 percent.
Core inflation that excludes energy, food, alcohol and tobacco, fell to 1 percent from 1.5 percent a month ago. In the EU27, annual inflation was 1.4 percent, down from 1.9 percent in March. The lowest annual rates were observed in Greece, Latvia and Sweden, while Romania posted the highest rate.
Eurozone's trade surplus more than doubled in March from a month ago, data published by Eurostat showed today. The surplus amounted to EUR 22.9 billion in March, higher than EUR 10.1 billion in February. In March 2012, the balance was positive at EUR 6.9 billion.
Euro area's exports rose a seasonally adjusted 2.8 percent in March compared with February. At the same time, imports fell 1 percent. Eurozone's trade with countries outside the European Union resulted in a surplus of EUR 15.8 billion compared with EUR 1.7 billion surplus in February and a deficit of EUR 8.2 billion in March 2012.
Elsewhere, Japan's industrial production increased in March at a faster rate than estimated earlier, final data released by the Ministry of Trade and Industry showed today. Industrial production gained a seasonally adjusted 0.9 percent month-on-month in March, faster than the 0.2 percent recorded in the initial estimates.
Compared to March 2012, industrial production decreased 6.7 percent in, indicating an improvement from the preliminary estimates which showed a 7.3 percent fall.
The Swiss National Bank will keep the franc cap as long as necessary, central bank board member Fritz Zurbruegg told L'Hebdo weekly in an interview published today. The minimum rate will remain as long as it is necessary for the central bank to fulfill its mandate of price stability.
Zurbruegg told the newspaper that the SNB still sees the exchange rate as "overvalued." The central bank set a 1.20 per euro cap on franc in September 2011 to curb deflation and to support economic growth.
Erasing much of its late Asian session bull-run, the euro slipped to 1.2441 against the Swiss franc following the euro area inflation report, taking 0.32 percent out of its advance above 1.2480 hit earlier in the session.
Meanwhile, the common currency climbed to 132.17 against the yen after the eurozone data, before parking the pair near the 132.0 area around 6:45 am ET. The next major resistance line for the euro-yen pair is visible around the 132.80 area.
The single currency held in ranges against the US dollar and the pound as the session rolled on, after running briefly bearish immediately following the eurozone inflation data. The euro-greenback pair was trading in a range of 1.2881 and 1.2845, while the euro-pound pair has been swinging between a high of 0.8463 and a low of 0.8448 in a relatively narrow range.
Traders will shift their focus from Europe to the key U.S. macroeconomic data for further direction in the upcoming session. The U.S. inflation for April, weekly jobless claims for the weekended May 11, housing starts & building permits for April and the Philadelphia Federal Reserve's manufacturing index for May are the key data to watch in the North American session.
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