The euro fell to fresh session lows against the dollar on Thursday after data showed that the annual rate of inflation in Germany slowed this month, fuelling fears over the risk of deflation in the euro area. EUR/USD hit 1.3573, the lowest since January 23 and was last down 0.66% to 1.3576. The pair was likely to find support at 1.3529, the low of January 23 and resistance at 1.3664, the session high. The annual rate of inflation in Germany slowed to 1.3% in January from 1.4% in December, compared to expectations for an uptick to 1.5%. German inflation fell 0.6% in January from a month earlier. Market expectations were for a decline of 0.4%. Earlier Thursday, data showed that the number of unemployed people in Germany fell by 28,000 in December, outstripping expectations for a decline of 5,000. The German unemployment rate was unchanged at 6.8%. A separate report showed that Spain’s recovery picked up in the fourth quarter, with gross domestic product expanding by 0.3%, up from 0.1% in the three months to September. Safe haven demand for the dollar continued to be underpinned amid a broad based selloff in emerging market currencies after the Federal Reserve rolled back its bond purchasing program by another $10 billion to $65 billion-per-month on Wednesday. Emerging economies such as Turkey and South Africa rely heavily on foreign investor flows to fund their current account shortfalls, making them particularly vulnerable to a reduction in global liquidity as the Fed scales back stimulus. Risk aversion was also fuelled by renewed concerns over a slowdown in China after revised data on Thursday showed that China’s HSBC manufacturing index ticked down to a six-month low of 49.5 this month, below the preliminary estimate for 49.6.
Posted on: Thu, 30 Jan 2014 13:35:39 +0000
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