Euro Fell on Disappointing French and Spanish Economic Data

Euro Fell on Disappointing French and Spanish Economic Data

For the 24 hours to 23:00 GMT on Friday, EUR declined 0.24% against the USD and closed at 1.3216, amid poor French and Spanish economic data and disappointing Italian bond auction.

In French economic news, the gross domestic product expanded 0.1% (QoQ) in the Q3 FY2012, compared to a 0.2% expansion previously estimated. However, consumer spending in France rose 0.2% in November, compared to a revised 0.1% fall in the previous month. Market had expected spending to remain unchanged. Separately, Spanish retail sales retreated 7.8% (YoY) in November, after declining 9.7% in the previous month. Additionally, the domestic producer price index (PPI) in Italy rose 2.2% (YoY) in November, slower than a 2.6% rise in October. The overall PPI rose 2.0% annually, compared to a 2.3% increase in the previous month.

Over the weekend, the German Chancellor, Angela Merkel stated that he Euro-zone sovereign debt crisis is far from over even though reform measures designed to address the roots of the problem are beginning to bear fruit.

The Euro also came under pressure, after Italy saw borrowing costs edge higher at an auction of five- and- ten-year government bonds, amid uncertainty ahead of national elections in February. It sold €3 billion of 10-year bonds at an average yield of 4.48%, up from 4.45% last month. The country also auctioned €2.87 billion of five-year debt at a yield of 3.26%, compared to 3.23% a month earlier.