The Euro exchange rate weakened against the majority of its most traded peers including the Pound, US Dollar and Canadian Dollar on Thursday afternoon after Germany posted worst than expected inflation data.
The inflation rate in the Eurozone’s largest economy slowed from the previous month and remained below the European Central Banks target for 2%. The data renewed concerns about deflation in the single currency bloc and caused investors to drop the Euro as risk aversion increased.
According to the Federal Statistics Office, inflation in Germany slowed to 1.3% in January down from the 1.4% recorded in December, and below economist forecasts for a rise to 1.5%.
Earlier in the session the Euro had found some support from data which showed that unemployment in Germany had fallen by 28,000 in December, better than the 5,000 fall expected by economists. A separate report out of Spain showed that the struggling nation had managed to make a slight recovery with GDP expanding by 0.3%.
The GBP/EUR pair pushed above the 1.21 mark yet again after the inflation data was released.
Against the US Dollar the Euro slumped to a session low after the US currency was supported from safe-haven demand and as data showed that the US economy expanded by 3.2% in the final quarter of 2013. 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.
The Euro will see volatility in Friday’s session due to the release of the latest Eurozone unemployment data. If the figure shows some sign of improvement then the currency could receive some support. If not then the currency will fall.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3573 ,
Euro,,British Pound,0.8227 ,
Euro,,Australian Dollar,1.5438 ,
Pound Sterling,,Euro,1.2150 ,