Euro Hits New 2012 Low against the Dollar

July 9, 2012

The dollar is 0.2% softer on balance against the euro and Swiss franc but earlier touched $1.2256.  Before the weekend on Friday, the common European currency got as weak as $1.2259, breaking below the prior 2012 low of $1.2289 set on June 1.

The dollar has edged 0.1% lower against the yen but shows gains of 0.4% relative to the Australian dollar, 0.3% versus the kiwi and 0.1% vis-a-vis the yuan.  The loonie and sterling are unchanged against the dollar.

Share prices have fallen in the Pacific Rim and Europe in continuing reaction to gloom about global growth.  Equities lost 2.3% in China, 1.9% in Hong Kong, 1.8% in the Philippines and Vietnam, 1.4% in Japan, 1.2% in South Korea, 1.0% in Australia, 0.9% in India, and 0.8% in Taiwan.  Losses so far in Europe amount to 1.6% in Spain, 0.6% in France, 0.4% in Britain and 0.3% in Germany.

Ten-year British gilt and German bund yields are down by three and two basis points.  The 10-year Japanese JGB is steady at 0.80%.

Oil and gold prices have firmed by 0.5% and 0.2% to $84.87 per barrel and $1582.20 per ounce.

Japan and Germany released current account figures.

  • Japan’s unadjusted current account surplus was JPY 215 billion in May, 62.5% smaller than in May 2011.  The seasonally adjusted JPY 282 billion surplus was similar to April’s JPY 289 billion.  Merchandise exports dropped 1.2% on month but were 11.3% greater than a year earlier.  The Basic Balance (current account plus long-term capital flows) was in deficit in May by JPY 1.53 trillion as outflows occurred in both direct and portfolio investment.  Stock and bond transactions generated a net JPY 962 billion outflow in June.
  • Germany posted an EUR 9.0 current account surplus in May, 21.6% wider than a year earlier.  The merchandise trade surplus was EUR 15.0 billion on a seasonally adjusted basis after EUR 16.2 billion in April and a monthly average of EUR 14.2 billion in the first quarter.  The EUR 61.1 billion year-to-May current account surplus was 10.7% wider than in the first five months of 2011.In May, exports advanced 3.9% on month but just 0.5% on year.

Japan’s economy watchers index unexpectedly slumped 3.4 points in June to a 43.8, well below the 50 breakeven level.  Japanese bank lending excluding trust accounts were 0.8% higher in June than a year earlier.  Such also had climbed 0.8% in the year to 1Q12 but just 0.5% between 2Q11 and 2Q12.

Japanese core domestic machinery orders dived 14.8% in May, a big shocker.  That drop easily reversed a 5.7% increase in April, leaving the April-May level 3.1% below the 1Q mean and far softer than the 2.5% 2Q-over-1Q increase that officials have been expecting.  Public sector orders for Japanese machinery plunged 21.8% on month, while foreign orders edged up 0.3% for a second consecutive month.

Chinese 12-month CPI and PPI inflation rates in June of 2.2% and minus 2.1% were each a tenth percentage point less than forecast.  Those outcomes were down from 4.1% and 1.7% in the year to December 2011 and 6.4% and 7.1% in June 2011.  Consumer prices for food were merely 3.8% higher than a year before. 

Euroland’s Sentix gauge, a barometer of investor sentiment toward the euro area economy, continued to deteriorate in July, dropping to negative 29.6 from minus 28.9 in June, negative 24.5 in May, minus 14.7 in April, and minus 8.2 (this year’s high) in March.

Real manufacturing sales in Germany rose 0.7% both on month and on year in May and recorded on-year growth of 0.8% in January-May.

French business sentiment according to the Bank of France measure dipped to a reading of 91 in June from a downward revised score of 92 in May and 96 at the start of 2012.

Greek CPI inflation eased to 1.3% last month from 1.4% in May.  Turkish industrial production rose 1.1% in May and was 5.9% higher than a year earlier.  Czech industrial production posted a 2.4% on-year drop in May after a 2.2% rise in the year to April.  The Danish current account surplus in May widened to DKK 13.7 billion from DKK 10.3 billion in April and DKK 1.9 billion in March.  Hungary’s trade surplus widened 85% on month to EUR 701 million in May.  Finland had a tiny EUR 20 million trade deficit in May after a shortfall of EUR 110 million in April.  Ireland’s construction purchasing managers index faltered to a reading of 42.5 in June from 46.3 in May and 45.3 in April. Swiss unemployment was merely 2.7% last month and 2.9% in adjusted terms.

U.S. consumer credit figures will be reported today.  Several officials speak publicly:  Evans, Williams and Dudley of the Federal Reserve, Tucker and Posen of the Bank of England, and ECB President Draghi.  EU finance ministers are meeting in Brussels.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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One Response to “Euro Hits New 2012 Low against the Dollar”

  1. I see first resistance in the eur/usd at 1.23600 . It is a fib at 23.6% from the whole swing lower and there was also a breakthrough at this level before price renewed fresh lows. What is interesting is that 1.23600 and fib 23.6% have the same number (236). As long as I know forex traders are very superstitious and always look for signs before opening new trades. So, I would surely bet on this level!