Euro Declines After Weak Spanish Inflation Data

06:17, 27th November 2014

(RTTNews) - The euro fell against its key counterparts in European deals on Thursday, after Spanish consumer prices fell at a faster-than-expected rate in November, aggravating concerns about low inflation in the euro area.

Preliminary figures from the statistical office INE showed that the harmonized index of consumer prices, or HICP, meant for EU comparison, dropped 0.5 percent annually after falling 0.2 percent in October. Economists had forecast a 0.3 percent decline.

The consumer price index decreased 0.4 percent year-on-year after falling 0.1 percent in the previous month. Economists had expected a 0.3 percent drop. The latest fall in the CPI was the biggest in three months.

The decline was attributed to falling commodity prices and energy that includes electricity and petrol.

Speaking at Finnish parliament, the European Central Bank President Mario Draghi told that the measures implemented by the bank, such as rate cuts, targeted TLTROs, covered bond purchase programme and asset-backed securities programme, are delivering tangible benefits, but time is needed for the positive effects to fully materialise.

"However, should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate," he told. The governing council has tasked relevant ECB staff and Eurosystem committees with the timely preparation of further measures to be implemented, if needed, he added.

The Governing Council will gather in Frankfurt on December 4.

Meanwhile, Eurozone economic sentiment unexpectedly improved for a second consecutive month in November, data from the European Commission showed.

The economic sentiment indicator rose to 100.8 from 100.7 in October. Economists had expected the index to eased to 100.3.

Moving away from an early high of 1.2522 against the greenback, the euro dropped to 1.2464. The next possible support for the euro lies around the 1.23 zone.

The single currency dropped to a 2-day low of 146.42 against the yen from an early high of 147.24. Continuation of the euro's downtrend may take it to a support around the 145.00 region.

The euro edged down to 0.7906 against the Sterling and held steady thereafter. If the euro continues fall, 0.78 is seen as its next support level.

The euro neared key 1.20 zone against the franc, edging down to 1.2018. The euro is poised to violate its peg rate of 1.20 on the downside.

The euro fell to a 3-day low of 1.5788 against the kiwi and a 2-day low of 1.4524 against the aussie, compared to Wednesday's closing values of 1.5869 and 1.4622,respectively. The euro may find support around 1.55 against the kiwi and 1.44 against the aussie.

Looking, German GfK consumer sentiment index for December is due shortly.

In the New York session, German preliminary CPI data for November and Canadian current account data for third quarter are due to be released.