Left Menu
Development News Edition

FOREX-Euro struggles near 3-year low on growth woes, yen unfazed by weak GDP

Reuters | Berlin | Updated: 17-02-2020 10:19 IST | Created: 17-02-2020 10:15 IST
FOREX-Euro struggles near 3-year low on growth woes, yen unfazed by weak GDP
Image Credit: Pixabay

The euro was on the back foot on Monday, as concerns mounted about weakening economic growth in Europe at a time financial markets and policymakers fret about a new threat to the global economy from a fast-spreading coronavirus in China.

The euro, which hit a 33-month low of $1.0817 on Friday, fetched $1.08385 in afternoon Asian trade on Monday, flat so far on the day but down 2.3% since the start of month - the worst performance among G10 currencies. "Coronavirus is increasingly looking like a long-term issue and thus, at least for currency markets, it will be playing second fiddle," said Kyosuke Suzuki, manager of currencies at Societe Generale.

"In contrast, sentiment on the euro is becoming clearer, with weak economic fundamentals helping to push it down." The German economy stagnated in the fourth quarter due to weaker private consumption and state spending, data showed on Friday, renewing fears of a recession at a time Chancellor Angela Merkel's conservatives are preoccupied with a search for a new leader.

Europe's biggest economy posted zero growth from the previous quarter while separate data showed euro zone gross domestic product grew 0.1% quarter-on-quarter in the fourth quarter, in line with forecasts but the weakest since 2014. There was even a chatter about the possibility of a rate cut by the European Central Bank, with euro zone money market instruments pricing in a small chance of rate cut in coming months, though bond yields were so far little moved.

"I think the currency market is going a bit too far in talking about easing possibilities," said Hideki Kishida, senior economist at Nomura Securities. "But people in the forex market are probably thinking that if data for the period before the coronavirus was so weak, it will get worse, and if China catches a cold, so will Germany."

Japan's economy was also under increasing strain, with GDP figures released on Monday coming in far below economist' forecasts, hitting Tokyo shares. The world's third-largest economy shrank 1.6% in the three months to December, the largest drop in six years, hit by sales tax hike.

Reaction in the currency market was muted as the safe-haven yen tends to be supported on bad news. It stood at 109.80 yen per dollar, little moved in a tight range for more than a week. "I am getting sick of looking at those .80 on my screen," said a trader at a U.S. bank, referring to the last two digits of the dollar/yen rate.

Most market players expect growth in the United States to remain stronger among the developed world, although data published on Friday provided a mixed picture. U.S. core retail sales was flat last month, lagging expectations of 0.3% growth while its rise in December was revised down to 0.2% from a previously reported 0.5%.

Industrial production also shrank more than expected by 0.3%. Still, economists have blamed one-off factors such as warm weather and output suspensions stemming from troubles at Boeing for the downbeat numbers.

The dollar index stood at 99.131, near Friday's 4 1/2-month high of 99.241. The Australian dollar edged up as investors assessed the latest reading on coronavirus cases in China's Hubei Province, the epicenter of the outbreak.

The province reported 1,933 new cases, up slightly from the previous day after two days of falls, but the number of new deaths dropped to 100 from 139. Nationwide, the total infections topped 70,000. The Australian dollar ticked up 0.15% to $0.67155. The currency, which is used as a proxy for risk on Chinese assets because of Australia's high trade exposure to the Asian giant, has partly been supported by expectations of stimulus from Beijing.

The onshore yuan was also up, trading 0.17% higher at 6.9760 per dollar by midday.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION / BLOG / INTERVIEW

All party meeting - Blocking dialogue not culture of Bengal, Mamata needs to speak up

If that happens, history will record it as the dark age of Bengal....

Diya Jalao for COVID 19: How Modi put Power Grids and power warriors at risk?

While Prime Minister Narendra Modis staunch supporters are busy in search of hidden science behind the sudden announcement of 9minutes9pm campaign but his ignorance of the actual science has put the nation in another danger. The scientists ...

Energy markets post-COVID 19: Recovery may take time, transition to continue

As oil markets have crashed, the experts believe the oil prices will come down drastically and continue making the energy transition a financial burden for many economies for a couple of years.  However, the market alone was never...

'Diya jalao' for COVID 19: Modi needs to practice his teachings and control fake news on social media

In his video message to the nation on Friday the Prime Minister talks about peoples collective power to win the invincible. However, he has made no concreate efforts to win over the confidence and represent the collective power of the polit...

Videos

Latest News

Goans respond to PM's appeal; light candles, diyas

Majority of Goans responded to Prime Minister Narendra Modis appeal to defeat coronavirus by switching off lights in their premises for nine minutes at 9 pm on Sunday amid the national lockdown. Several people stood in their balconies in Pa...

COVID-19 lockdown: Indian Railways ensures supply of sugar, salt and edible oil

Amid the nationwide lockdown due to COVID-19, the Indian Railways is making efforts to ensure that there is no shortage of sugar, salt and edible oil for consumption of the common man. This comes in the backdrop of 21-day lockdown imposed b...

70-year-old COVID-19 patient recovers in Gujarat

A 70-year-old COVID-19 patient was discharged from Sardar Vallabhbhai Patel Hospital on Sunday after he tested negative in the last 24 hours.Till now, Gujarat has 122 confirmed cases of coronavirus, 18 cured, discharged or migrated and 11 d...

Lata Mangeshkar, Rajinikanth, Deepika light candles, diyas to honour India's fight against COVID-19

Prominent personalities from the Indian film industry including Lata Mangeshkar, Rajinikanth, Akshay Kumar, Deepika Padukone, Ranveer Singh on Sunday lit candles and lamps responding to Prime Minister Narendra Modis appeal to show solidarit...

Give Feedback