The euro weakened against its major rivals in European deals on Tuesday, ahead of the Eurozone consumer price inflation data due tomorrow, which could add further pressure on the European Central Bank to expand stimulus measures in future.
Eurostat is due to release flash CPI estimate for the euro area in August. Inflation is expected to be flat on year, down from July’s 0.1 percent rise. Core CPI is expected to match July’s reading of 0.9 percent.
The ECB target inflation of just under 2 percent, and the bank is cautious that inflation could turn negative in the next few months due to lower oil prices, weaker growth in China and an appreciating euro.
Worries over global growth intensified, led by persistent fears about a slowdown in China. Weak Chinese industrial profits data released yesterday added to fears over a hard landing in China, ahead of PMI factory numbers slated for release on Oct 1.
Spanish consumer prices dropped for a second straight month in September and at a faster-than-expected pace, marking its biggest fall in eight months, preliminary data from the statistical office INE revealed.
The consumer price index fell 0.9 percent annually following a 0.4 percent decline in August. Economists had forecast a 0.5 percent drop.
In other economic news, survey data from European Commission showed that Eurozone economic confidence improved notably in September.
The economic sentiment index rose to 105.6 in September from revised 104.1 in August. It was forecast to drop marginally to 104.1 from August’s originally estimated reading of 104.2.
The currency was trading mixed in the Asian session. While the euro advanced against the pound and the greenback, it held steady against the yen and the franc.
In European trading, the euro was trading lower at 1.1219 against the greenback and 0.7379 against the pound, reversing from its early high of 5-day high of 1.1281 and near a 5-month high of 0.7436, respectively. The euro is seen finding support around 1.10 against the greenback and 0.72 against the pound.
The 19-nation currency pared gains to 134.54 against the Japanese yen, after climbing to 134.96 at 3:45 am ET. If the euro extends slide, it may locate support around the 133.00 area.
The 19-nation currency eased back to 1.7662 against the kiwi, 1.5039 against the loonie and 1.6069 against the aussie, after having advanced to a 5-day high of 1.7901, near 5-week highs of 1.5143 and 1.6250, respectively in early deals. The next possible support levels for the euro may be seen around 1.76 against the kiwi, 1.49 against the loonie and 1.59 against the aussie.
Although the euro fell to a 4-day low of 1.0897 against the franc at 5:00 am ET, it fluctuated in a short while. The pair was valued at 1.0945 when it ended Monday’s trading.
Looking ahead, preliminary German CPI data for September, Canada industrial product and raw materials price indices for August, U.S. S&P/Case-Shiller home price index for July and U.S. consumer confidence index for September are set to be released in the New York session.
At 3:40 pm ET, Bank of England Governor Mark Carney is expected to speak at Lloyds of London.
The material has been provided by InstaForex Company – www.instaforex.com