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Euro Closes near Low--New York Summary

Posted by Joseph Trevisani on Jan 30, 2014 7:36:00 PM

The euro opened In New York at 1.3585 well off the Asian high of 1.3667 which came just after yesterday's New York close and was a continuation of late U.S. levels.  Weak inflation numbers in several German states kept the euro on the defensive throughout the European session.  The high of 1.3656 came at the London open. The overall German numbers (0.6% vs. 0.4%, 1.3% y/y vs. 1.5%) at the 8:00 am open brought another 10 point drop to 1.3574.

U.S. fourth quarter GDP at 8:30 am, 3.2 % annualized as forecast, nevertheless brought  another brief drop to the euro to 1.3568. A period of consolidation followed with trading between 1.3567 and 1.3589.  

Poor U.S. pending home sales for December at 10:00 am (-8.7% vs. -0.3%) while  perhaps due to unusually cold weather, coincided with the euro beginning a sustained though gradual fall, reaching the day's low of 1.3544 around 11:30 am,  just ahead of the September 6th trend line at 1.3542. 

Tomorrow’s EMU CPI data at could be telling, particularly if the annual rate drops below the 0.8% December rate.   Last year CPI more than halved from a 1.83% average in the first quarter to 0.8% in the last.  The ECB is as alert to the dangers of deflation as is the Federal Reserve, even if it has fewer tools for coping with it.

The euro closed at 1.3555.

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