Euro Eases Amid Risk Aversion

02:15, 31st August 2015

(RTTNews) - The euro edged down against its major rivals in European deals on Monday, erasing its early gains, as prospectus of higher U.S. rates and concerns over withdrawal of more support from the Chinese government to avert stock market turmoil pressurized European stocks.

At the annual gathering in Jackson Hole, Wyoming, the Fed officials left the door open for an interest rate hike in September, despite the recent turmoil in global markets.

In an interview with CNBC, Federal Reserve Vice Chairman Stanley Fischer said Friday that it was too early to tell if the Fed will raise interest rates in September, but noted that the central bank is heading in the direction of raising rates.

Chinese stock plunged after Financial Times reported that China's government would not take measures to boost the stock market through large scale share purchases, but would rather step up efforts to find and punish those suspected of "destabilising the market."

China will release tomorrow official PMI for August and investors wait to see if the world's second largest economy is heading for a hard landing.

The preliminary data from Eurostat showed that Eurozone inflation remained unchanged in August.

Inflation came in at 0.2 percent in August, the same rate as seen in July and June. It was forecast to ease to 0.1 percent.

Excluding energy, food, alcohol and tobacco, core inflation was stable at 1 percent in August. It was expected to ease to 0.9 percent.

The euro was trading in a positive territory in the previous session.

In European trading, the euro pared gains to 135.80 against the yen, 1.1196 against the greenback and 1.4836 against the loonie, reversing from its early highs of 136.35, 1.1261 and 1.4907, respectively. The euro is likely to find support around 134.5 against the yen, 1.10 against the greenback and 1.474 against the loonie.

The euro eased back to 0.7261 against the pound, heading to pierce its early 1-week low of 0.7244. This may be compared to an early high of 0.7297. On the downside, the euro may challenge support around the 0.70 mark.

On the flip side, the euro advanced to 1.0806 against the franc, following a decline to 1.0740 at the beginning of today's Asian session. The euro is seen finding resistance around the 1.09 level.

Looking ahead, Chicago PMI for August is to be published at 9:45 am ET.