Euro is showing weakness today, thanks in large part to disappointing economic data. Also impacting the outlook for the euro are continued difficulties in Italy and other periphery countries.
It’s hard to get excited about the euro when more hurdles seem to be thrown up. The latest industrial production data out of the eurozone indicates that the economy continues to struggle. Industrial production sank 0.4 per cent overall, which is more than the expected 0.1 per cent drop. Germany’s output is in line with the eurozone’s average, at 0.4 per cent. However, France’s industrial production dropped by 1.2 per cent.
The news is putting pressure on the euro, even with the ECB‘s recent insistence that economic recovery will be slow — and not start until the second half of 2013.
Also weighing on the euro is the continued drama in Italy. A government hasn’t been put together, and bond yields are on the rise again. Once again, Italy is bringing focus back to the periphery, and the problems besetting the eurozone as a whole.
With all of this uncertainty, perhaps the Bundesbank in Germany is right to predict that the euro is far from out of the woods.
At 13:03 GMT EUR/USD is down to 1.2970 from the open at 1.3026. EUR/GBP is down to 0.8675 from the open at 0.8745. EUR/JPY is down to 124.4100 from the open at 125.0550.
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