Euro (EUR) Exchange Rate: Factory Production Dip causes Declines against the US Dollar
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The common currency was knocked yesterday as German trade balance data for December was negatively revised and the Italian economy was shown to have contracted by more-than-forecast in the fourth quarter of 2013 (year-on-year).
The Euro held onto declines overnight and saw its appeal dim further as Ukraine-inspired risk aversion and concerns that China’s economy is losing momentum pushed investors towards safe-haven assets like the US Dollar and Japanese Yen.
On Wednesday a slightly disappointing industrial production report for the 18-nation Eurozone kept pressure on the Eurozone.
A dip in energy output saw seasonally adjusted production slide by 0.2 per cent in January, month-on-month. Economists had expected a monthly increase of 0.5 per cent.
This was the second consecutive monthly fall.
However, December’s decline was positively revised to 0.4 per cent and on the year production was up 2.1 per cent, more than the 1.9 per cent annual gain expected.
According to industry expert Paul Hannon; ‘The decline in output wasn’t widespread across the currency area, with increases recorded in Germany and Spain. However, there was a very sharp fall in the Netherlands, the Eurozone’s fifth largest member, which saw output drop by 6.4 per cent from December, while in Finland output fell by 3.5 per cent and in France it fell by 0.3 per cent.’
The Euro to Pound Sterling (EUR/GBP) exchange rate is trading in a fairly narrow range today due to a lack of influential economic data for the UK.
The Euro to US Dollar (EUR/USD) pairing was little changed after the Eurozone industrial output report was released.
Tomorrow the publication of the European Central Bank’s monthly report could trigger notable Euro movement.
Currently the Euro is trading against the Pound in the region of 0.8338 and is trading against the US Dollar in the region of 1.3860