The euro began New York trading (8:00 am) at 1.3640, the low up until that point and not far from what became the mid-point for the day.
The euro was mildly offered through most of the Asian session and was relatively stable in Europe until EMU inflation and unemployment data at 6:00 am NY time.
October CPI came in a 0.7% y/y and core at 0.8% y/y, much lower than the 1.1% y/y and 1.0% y/y forecasts. Unemployment rose 0.2% to 12.2% in September and the prior month was revised from 12.0% to 12.2%. In the first 15 minutes after the release the euro fell from 1.3692 to 1.3664.
Weak German retail sales for September -0.4% m/m vs. 0.4% and 0.2% y/y vs. 1.1% y/y released there hours before the CPI numbers did not occasion a selloff in the euro but set the economic stage for the later for the later figures.
By the New York open the tone was set. U.S. Jobless claims at 340,000 were as expected. Notes from several banks stating that they now expected an ECB rate cut before the end of the year brought the euro to 1.3629 but a quick rally returned to 1.3656.
A much stronger than forecast Chicago Purchasing Managers index at 9:45 am, 65.9 vs. 55.0, and the Milwaukee ISM at 9:52 am, 57.1 vs. 53.0, brought the euro to 1.3602. Another short spurt of buying ahead of 1.3600 returned to 1.3617 but that was the last rally of any size above the figure. Though the volatility subsided, the steady selling did not and the euro slipped lower and lower in the afternoon.
Once 1.3600 was broken the euro moved to 1.3584, then back to 1.3599 but could not regain space above the figure and slowly declined to the day's low at 1.3576, closing at 1.3581.
Expectations for next Thursday's ECB meeting have shifted dramatically toward some acknowledgement by the bank of the slipping economic prospects on the continent, if not an outright rate cut.
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