Forexpros – The euro rose against the dollar in Asian trading early Thursday on continued hopes both the European Central Bank and the Federal Reserve will unveil monetary stimulus measures to kick-start recovery.
Weak industrial output figures out of Germany tempered the pair’s gains as did a Standard & Poor’s decision to slap a negative outlook on Greece.
In Asian trading on Thursday, EUR/USD was trading up 0.08% at 1.2375, up from a low of 1.2371 and off from a high of 1.2376.
The pair was likely to find support at 1.2342, the low from Aug. 6, and resistance at 1.2442, the high from Aug. 7.
Expectations continued to build in global foreign exchange markets that the European Central Bank will reactivate a bond-buying program to lower borrowing costs in Spain and Italy, which sent the euro gaining in early Asian trading.
Talk the Federal Reserve will roll out a similar tool known as quantitative easing, in which the U.S. central bank buys bonds held by banks to spur recovery, also boosted the euro by weakening the dollar.
However, weak output data out of Germany dampened spirits somewhat.
German industrial production fell 0.9% in June, slightly worse than analysts’ calls for a decline of 0.8%, and down from an upwardly revised 1.7% gain in May.
The data came on the heels of more bad news out of Germany.
German factory orders fell 1.7% in June, well above expectations for a 1.0% decline.
Meanwhile, Italy reported that its gross domestic product contracted by 0.7% in the second quarter, worse than expectations for a 0.6% contraction.
Furthermore a Standard and Poor’s decision to slap a negative outlook for Greece coupled with a warning that Athens could miss financial targets set by its international lenders — which would increase the likelihood of a default — also weighed down on the euro.
Greek Finance Minister Yannis Stournaras has the said government still needs to present a plan to creditors outlining plans to shave EUR4 billion off spending as part of a broader commitment to bring 2013-14 budget cuts to EUR11.5 billion.
Still, talk of ECB intervention offset bearish news.
The euro, meanwhile, was flat against the pound and up against the yen, with EUR/GBP down 0.01% at 0.7897, and EUR/JPY trading up 0.10% at 97.07.
Later Thursday, the ECB will publish its monthly bulletin, which will provide analysis of current and future economic conditions from the bank’s perspective.
The U.S. is to publish its weekly report on initial jobless claims and data on the trade balance.
Forexpros
