Forex Market Update: Euro Slips against Dollar
Despite an economic survey showing that euro zone’s industrial output rose more than expected in April, the euro fell against the U.S. dollar on Tuesday as investors’ sentiment in the currency bloc’s largest economy, Germany showed fair amount of cautiousness even as the single currency remains vulnerable amid growing concerns that the European Central Bank (ECB) could slash its deposit rate to negative in order to boost lending.
The Zew Index, a gauge on economic sentiment edged up to 36.4 points in May from 36.3 in April while economists forecast was for a reading of 38.3.
The euro which edged higher against the U.S. dollar during Asian trading hours pared gains after the release of German economic sentiment index.
Although industrial output in the euro zone surprised market participants, the overall picture of the currency bloc remains gloomy with many economies such as Spain reeling under recession and unemployment at record high levels. Moreover, industrial output in the Italy and France, which are Europe’s third and second largest economies respectively, fell in the same period.
At last check, the euro was down 1.2972 0.03 to $1.2972, having touched a session high of $1.3030.
The euro also edged down against the Japanese currency to trade at yen 131.765.
The euro remains susceptible to further weakness as the ECB hinted earlier that benchmark interest rates could be brought down and deposit rate could come to zero in case economic indicators warrant it.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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