Euro Steady Ahead Of EU Finance Ministers Meeting

Euro Steady Ahead Of EU Finance Ministers Meeting


The euro failed to make any significant headway to either direction in early deals on Monday on caution ahead of Eurozone finance ministers meeting in Brussels later in the day.
Although the common currency showed some signs of recovery in early London session, it pulled back shortly on global economic growth worries.
Concerns over the health of the world's largest economy reddened Asian and the European equity markets. Downbeat economic data from Japan coupled with weekend comments from Chinese Premier Wen Jiabao that downward pressure on the economy is still "relatively large" also sparked risk aversion.
Last month's EU summit provided only a temporarily relief to alleviate the market panic about the European debt crisis. Although some major steps like the rescue fund ESM could be used to recapitalize Spanish banks directly taken in its June-end summit, the lack of further clarifications on the implementation aggravated negative market sentiment.
Cooling inflation provided adequate space for China to add more stimulus to build up the fragile economy, with the red dragon's consumer price index easing to a 29-month low in June. Last week, China slashed its interest rates for the second time in a month and more easing likely in the future.
Germany's exports rose more than expected in May, bracing the expansion of trade surplus to a more than expected EUR 15.3 billion from last month's revised figure of EUR 14.5 billion.
The euro rose to 1.2317 against the US dollar around 6:30 am ET, up from Asian session's new multi-year low of 1.2257. The recovery, however, was not sustainable as the pair shed more than 130-pips following the dismal US nonfarm payrolls data last week.
The common currency also advanced slightly to 0.7950 against the pound around this time, from an early Asian session's fresh multi-year low of 0.7921. The short to medium term recovery for the pair is still under pressure given the increasing risk-aversion in the market.
The euro-franc pair hardly moved out of its recent ranges, trading between 1.2015 and 1.2012.
Failing to move above its near-term resistance line, the single currency is just trading above the 98.0 level against the yen. The day's high for the pair was 98.07, up from a new monthly low of 97.49 hit earlier in the Asian session.
Japan's core machine orders disappointed the market, with the orders plummeting a seasonally adjusted 14.8 percent in May from a month ago, the biggest drop since comparable figures were made available in 2005.
Looking ahead, the U.S. consumer credit for May is the only economic data to watch in the New York session.


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