Euro Attempts to Bounce Despite Disappointing Economic Reports

The euro is trading below the opening level against most of its major rivals currently, but is showing tendency to rebound and was actually able to erase losses versus the US dollar completely. The bounce seems to follow the release of eurozone macroeconomic data, but that in no way looks justified as the indicators were disappointing for the most part.

According to the flash report, Spain’s Consumer Price Index rose 1.9% in May from a year ago, demonstrating slower growth than 2.1% predicted by analysts and 2.6% registered in the previous month, while month-over-month the index fell 0.1%. The German CPI is still pending, but German import prices data has been released. And it was disappointing too, showing a drop by 0.1% in April from March instead of rise by 0.2% promised by forecasters. French household consumption rose 0.5% in April, but it was still below forecasts (0.8%). The only positive surprise came from French gross domestic product that rose 0.4% in the first quarter of 2017, faster than the forecast growth of 0.3%, though even that was a slowdown from the 0.5% growth in the fourth quarter of 2016.

The euro fell yesterday following the speech from Mario Draghi, President of the European Central Bank. He took a cautious stance, arguing in favor of maintaining monetary stimulus:

For domestic price pressures to strengthen, we still need very accommodative financing conditions, which are themselves dependent on a fairly substantial amount of monetary accommodation.

EUR/USD dropped to 1.1109 intraday but was trading near the opening level of 1.1162 as of 10:36 GMT today. EUR/JPY traded at 123.84 after opening at 123.20 and touching the session low of 123.15. EUR/CHF opened at 1.0911, fell to the daily low of 1.0879, but bounced to 1.0901 later.

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