Euro Advances Amid Risk Appetite
December 05 2016 - 12:33AM
RTTF2
The euro climbed against its major counterparts in early
European trading on Monday amid risk appetite, as European markets
shrugged off political problems in Italy after the defeat of the
nation's Prime Minister Matteo Renzi in a referendum on
constitutional reform.
Survey results from IHS Markit showed that the euro area private
sector expanded at the fastest pace in 11 months in November but
the pace of growth was slightly weaker than initially
estimated.
The final composite output index rose less-than-estimated to
53.9 in November from 53.3 in October. The flash score was
54.1.
Germany's private sector expanded strongly in November. The
final composite PMI fell marginally to 55 from 55.1 in October, but
remained above the flash reading of 54.9.
The final services PMI came in at a 6-month low of 55.1 versus
54.2 in October. The flash score was 55.
Data from Eurostat showed that Eurozone retail sales rebounded
in October after falling for two straight months.
Retail sales volume climbed 1.1 percent month-on-month in
October largely driven by non-food sales. October's increase
reversed a revised 0.4 percent fall in September.
Speaking to France 2 television, European Economics Commissioner
Pierre Moscovici said that Italy is stable enough to withstand the
political instability created by the defeat of Renzi in a
referendum.
"It's a solid country with solid authorities and I have complete
confidence that Italy can handle this situation," he told.
The euro fell sharply in the Asian session, amid worries about
political and economic instability in Europe after Italian Prime
Minister Matteo Renzi said he will resign following his defeat in a
constitutional reform referendum on Sunday.
The euro edged up to 0.8377 against the pound, recovering from
its early 4-1/2-month low of 0.8305. The next possible resistance
for the euro-pound pair is seen around the 0.86 mark.
Survey data from IHS Markit and the Chartered Institute of
Procurement & Supply showed that British service sector grew
for a fourth straight month in November at its fastest pace in ten
months amid rising employment.
The purchasing managers' index for the services sector rose to
55.2 from 54.5 in October.
The single currency, having fallen to near a 9-month low of
1.0505 against the greenback at 6:15 pm ET, reversed direction and
was trading higher at 1.0662. Continuation of the euro's uptrend
may see it challenging resistance around the 1.08 level.
Following a 2-week low of 1.0695 hit at 6:15 pm ET, the euro
climbed to a 5-day high of 1.0794 versus the franc. Further uptrend
may take the euro to a resistance around the 1.12 region.
The 19-nation currency reversed from an early 6-day low of
118.72 against the Japanese yen, advancing to 121.62. If the
euro-yen pair extends rise, 125.00 is possibly seen as its next
resistance level.
Survey figures from Cabinet Office showed that Japan's consumer
confidence declined for the second straight month in November to
the weakest level in six months.
The seasonally adjusted consumer confidence index fell to 40.9
in November from 42.3 in the previous month. In September, the
reading was 43.0.
The euro bounced off to 1.4322 against the aussie, 1.4191
against the loonie and 1.5006 against the kiwi, off its early
weekly low of 1.4147, 1-year low of 1.4027 and 1-1/2-year low of
1.4772, respectively. The euro is seen finding resistance around
1.45 against the aussie, 1.43 against the loonie and 1.51 against
the kiwi.
Looking ahead, at 8:30 am ET, the Federal Reserve Bank of New
York President William Dudley speaks about the economy and monetary
policy in New York.
Markit's final U.S. services PMI, ISM non-manufacturing
composite index and labor market conditions index for November are
due in the New York session.
The Federal Reserve Bank of St. Louis President James Bullard
will speak about the US economic outlook at the Arizona State
University's annual economic forecast luncheon in Phoenix at 2:05
pm ET.
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