Market Commentary and Intraday News

Euro Weakens Ahead Of EU Finance Ministers' Meeting

226 days ago

(RTTNews) - The euro erased last week's solid gains on Monday as the region's persisting debt-concerns eclipsed Friday's upbeat U.S. jobs data, ahead of a meeting of euro-zone finance ministers in Luxembourg later today.

Investors are also taking cautious stand ahead of the U.S. third quarter reporting season, which start with Alcoa (AA) tomorrow.

The high-yielding currencies were down in the morning on increasing safe-haven buying after the World Bank cut its growth forecast for East Asia and Pacific region, saying China's cooling economy faces the risk of a ''more pronounced slowdown."

The resource-linked currencies fell after the World Bank cut its growth forecast for China this year to 7.7 percent from 8.2 percent projected earlier in May, citing the pronounced slowdown in domestic demand and investment growth.

Investor confidence in Eurozone improved for a second consecutive month in October, but remained below economists' forecasts, data released by the think-tank Sentix showed today.

The Sentix Index rose to -22.2 in October from -23.2 in September. Economists had forecast an improvement in the reading to -20.9. The expectations index improved for a third consecutive month.

With employment in the U.S. rising for the twenty-fourth consecutive month in September, the Labor Department released a report on Friday showing that the unemployment rate for the month fell to its lowest level in well over three years.

The report showed that employment increased by 114,000 jobs in September following an upwardly revised increase of 142,000 jobs in August. Economists had expected employment to increase by 113,000 jobs compared to the addition of 96,000 jobs originally reported for the previous month.

The continued job growth pushed the unemployment rate down to 7.8 percent in September from 8.1 percent in August. The drop surprised economists, who had expected the unemployment rate to come in unchanged.

The euro failed to extend last week's rally above the 1.31 level against the US dollar, falling to a 4-day low of 1.2939, down 0.72 percent from Friday's closing value of 1.3033. The near-term bias is bearish for the pair, which is expected to re-test the 1.28 level.

The common currency depreciated almost 1.35 percent to a 5-day low of 101.15 against the yen from Friday's closing quote of 102.52. The cross is expected to extend its downtrend below the 100-mark in the near-term.

The euro moved closer to 1.21 level against the Swiss franc, having shed almost 0.09 percent from last week's close of 1.2114 and 25-pips from the day's high of 1.2128. The next support beyond the key 1.21 mark is seen around the 1.2080 level.

The single currency that tested Friday's fresh 2-week peak of 0.8080 against the pound in the Asian trading shed 20-pips to 0.8060 at the beginning of today's European session. The euro-pound pair traded in a range between 0.8078 and 0.8066 most of the session.

The fx market is expected to have a quiet US session today on account of the Columbus Day government holiday.

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