Euro Falls Against Dollar After Draghi Comments and Other Top Forex News

Tuesday, May 7, 20130 comments



The euro fell against the dollar on Monday after European Central Bank President Mario Draghi said the bank will examine euro zone data in the coming weeks and is ready to act if necessary. The comments come amid increasing concerns that the european economy is continuing to stagnate. This mornings PMI data from Germany showed a contraction in business activity, which heaped further misery on the eurozone after last week’s unemployment rate hit a record 12.1% in March.
Last Thursday The ECB trimmed benchmark interest rates by 25 basis points to 0.50%, in an attempt to jumpstart the economy. Draghi said a further cut could be necessary if the economy doesn’t gain steam.
In today’s trading the EUR/USD hit 1.3067 during U.S. morning trade, a two week low; the pair subsequently consolidated at 1.3069, shedding 0.38%.
More Coverage of the Day’s Top Story
  • DailyFX: Euro struggles amid deepening recession – ECB to buy more time. – The Euro pared the overnight advance to 1.3139 as service-based activity in Europe contracted for the fifteenth month in April, while retail spending contracted another 0.1% in March after falling a revised 0.2% the month prior.
  • Reuters: Euro zone set for deeper recession in Q2 – PMI. –  The euro zone’s business downturn dragged on in April, suggesting the region may be falling deeper into recession this quarter, business surveys showed on Monday.
More Top Stories:
Telegraph: German euro founder calls for ‘catastrophic’ currency to be broken up. – Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is “leading to disaster”.
Forex News: Will USD/JPY break 100 this week? – The U.S. dollar is trading higher against all of the major currencies this morning and the lack of U.S. data means some currencies are experiencing deep sell-offs and others shallow declines depending on how their own economic reports surprised overnight. The movements of these currencies are interesting but many traders have their eye on USD/JPY, which is inching its way towards 100.
FT: Study finds foreign exchange trades give information edge to banks. – A study has shown that investment banks can make windfall profits by copying customers’ foreign exchange trades, raising fresh concerns about the lack of transparency in the world’s largest financial market.
Marc Chandler: Currency outlook. – There are several incremental additions to our information set from developments over the past week. The US manufacturing sector is stalling, with the ISM at new four month lows, and the sector failed to add jobs in April, for the first time since last September. The euro area economy remains weak and the German engine also appears to be flat lining.
Business Day: Is George Soros shorting the Aussie? – The Australian dollar fell in evening trade on the back of rumours that billionaire US investor George Soros is planning to short the currency.
BusinessWeek: Canadian dollar gains versus most peers as building permits rise. – The Canadian dollar strengthened versus most of its most-traded counterparts after a report showed March building permits increased more than forecast.
FT: Aussie sinks on rate cut expectations. – The Australian dollar fell against other major currencies amid growing speculation that the country’s central bank would cut interest rates to help bolster economic growth.
Investing.com: USD/JPY extends gains after U.S. jobs data. –  The dollar rose to a more than one-week high against the yen on Monday as Friday’s better-than-expected U.S. employment data bolstered risk appetite, underpinning dollar demand.
Investing.com: GBP/USD slips lower in quiet trade. – The pound slipped lower against the U.S. dollar in holiday-thinned trade on Monday, as markets in the U.K., the world’s largest foreign-exchange trading center, remained closed for the May bank holiday.
Investing.com: Gold gains as market views precious metal as oversold. – Gold prices inched up in U.S. trading on Monday after investors snapped up nicely priced positions in the metal on the view recent sell-offs may have pushed prices too low.
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