Euro Trades Higher After German Data; ECB Bond Buying Plan

Euro Trades Higher After German Data; ECB Bond Buying Plan


The euro traded higher against most major currencies in the early European session on Friday after a report showed that Germany's exports and imports increased unexpectedly in July.
Data from Destatis revealed that exports grew 0.5 percent month-on-month, partially offsetting June's 1.4 percent fall. Likewise, imports gained 0.9 percent after falling 2.9 percent in June.
Economists had forecast a 0.5 percent drop in exports and 0.3 percent decrease in imports.
The trade surplus fell to EUR 16.9 billion from EUR 18 billion in June. But it exceeded the consensus forecast of EUR 15.3 billion.
The euro got a lift after ECB President Mario Draghi on Thursday unveiled the bank's latest bond purchase plan in a bid to tackle the euro area debt crisis.
"The Governing Council today decided on the modalities for undertaking Outright Monetary Transactions (OMTs) in secondary markets for sovereign bonds in the euro area," Draghi said in his introductory statement to the regular post-decision press conference.
"As we said a month ago, we need to be in the position to safeguard the monetary policy transmission mechanism in all countries of the euro area."
Investors are also looking ahead to the release of U.S. non-farm payrolls data tonight.
Economists project the U.S. economy to add 130,000 jobs in August following an addition of 163,000 job positions in July. The unemployment rate is expected to be at 8.3 percent.
The euro hit 1.2139 against the franc for the first time since mid March. If the euro rises further, it may target 1.22 level. At Thursday's close, the euro-franc pair was worth 1.2047.
The Swiss unemployment rate remained unchanged in August, data released by the State Secretariat for Economic Affairs (SECO) showed.
The seasonally adjusted unemployment rate held steady at 2.9 percent as expected by economists.
The number of unemployed rose by 3,529 or 3 percent month-on-month to 119,823 at the end of August.
Against the greenback, the European single currency advanced to more than a 2-month high of 1.2686, compared to yesterday's New York session close of 1.2632. The next resistance level for the euro-greenback pair is seen at 1.28.
The euro also rallied to a new 2-month high of 100.16 against the yen with 100.5 seen as the next upside target level. The euro-yen pair ended yesterday's deals at 99.63.
The Japanese government is most likely to run out of cash by the end of November, reports said Friday, citing remarks by Finance Minister Jun Azumi.
Azumi said the Parliament should find a consensus and pass a debt-issuance bill, which is needed to fund a large part of the government's budget for the current fiscal.
Against the Canadian dollar, the euro inched up to 1.2444 from an early low of 1.2402. On the upside, 1.25 is seen as the next target level for the euro. The pair finished yesterday's deals at 1.2416.
The euro recovered from early 4-day lows of 1.5732 against the NZ dollar and 1.2237 against the Australian dollar and is now worth 1.5776 and 1.2270, respectively. The euro-aussie and the euro-kiwi pairs were worth 1.2287 and 1.5768, respectively at yesterday's close.
Looking ahead, German industrial production for July is due shortly.
The U.S. and Canadian employment data for August, Canadian building permits for July and the Ivey PMI for August are the major economic reports due out in the North American session.