Euro Falls Amid Risk Aversion
September 27 2016 - 6:19AM
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The euro slipped against its major counterparts in early New
York trading on Tuesday amid risk aversion, as European shares
declined on worries about the strength of European banks.
Rival Deutsche Bank fell about 2.7 percent in Germany to extend
Monday's 7 percent loss after a German magazine reported that
Chancellor Angela Merkel had ruled out providing government aid to
the bank.
Commerzbank lost 3 percent on a report that the German lender
plans to slash around 9,000 jobs over the coming years as part of a
restructuring plan.
Falling oil prices also weighed, with the crude oil tumbling
below $45 after Saudi Arabia and Iran downplayed expectations of a
deal with Russia to curb oil supplies.
Traders digested last night's highly anticipated presidential
debate between Hillary Clinton and Donald Trump in Hofstra
University in New York.
While some pundits have given the edge to Clinton, the debate
did not seem to feature any substantial blows that will lead to a
significant shakeup in the race for the White House.
Recent polls have shown Clinton and Trump running neck-and-neck,
suggesting that uncertainty about the outcome of the race could
prevail for the next several weeks.
In economic front, data from the European Central Bank showed
that Eurozone money supply growth accelerated in August and loans
to households increased at a steady pace.
The broad monetary aggregate M3 climbed 5.1 percent year-on-year
in August, faster than the 4.9 percent increase seen in July.
The currency has been trading in a negative territory during the
European session.
The euro slipped to a 5-day low of 112.25 against the yen, off
its early high of 113.57. The euro may locate support around the
111.5 mark.
The minutes from the Bank of Japan's July 28-29 meeting showed
that the members of the board judged that the county's economic
recovery is on track, with the inflation outlook remaining slightly
negative due to soft energy prices.
At the meeting, board decided to hold its target of raising the
monetary base at an annual pace of about JPY 80 trillion. Also, the
board voted to maintain a negative interest rate of -0.1
percent.
The euro dropped to a 4-day low of 1.1198 against the greenback,
after having advanced to 1.1259 at 3:30 am ET. On the downside,
1.10 is likely seen as the next support level for the
euro-greenback pair.
Data from Standard & Poor's showed that U.S. home price
growth in major metropolitan areas continued to slow in the month
of July.
The report said the S&P/Case-Shiller 20-city composite home
price index was up 5.0 percent year-over-year in July compared to
the 5.1 percent increase seen in June. Economists had expected the
rate of growth to hold unchanged.
After advancing to 0.8693 against the pound at 5:45 am ET, the
euro retreated to a 4-day low of 0.8627. Continuation of the euro's
downtrend may see it challenging support around the 0.85
region.
The single currency slid to a 4-day low of 1.0870 against the
Swiss franc, reversing from a 4-day peak of 1.0912 hit at 3:00 am
ET. The euro is likely to find support around 1.06 against the
franc.
The euro held steady against the aussie, after touching a
multi-week low of 1.4615 at 3:15 am ET. The next possible support
for the euro-aussie pair is seen around the 1.45 region.
The euro retreated from an early 5-1/2-month high of 1.4925
against the loonie in European morning trading and held steady
since then. The pair was valued at 1.4883 when it finished Monday's
deals.
The common currency that slid to a 4-day low of 1.5341 against
the kiwi at 4:30 am ET moved sideways in subsequent part of the
deals. The kiwi-greenback pair ended yesterday's trading at
1.5465.
Looking ahead, at 11:15 am ET, Federal Reserve Governor Stanley
Fischer will deliver a speech titled "Why Study Economics?" at the
Howard University Economic Convocation in Washington DC.
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