US dollar pushed higher against the euro on Friday, after positive signal was submitted from the United States, fueling expectations of a possible near-term exit of FEDs easing program.
EUR/USD pair fell down to 1.3298 during European afternoon trade, after which consolidation followed at higher levels, 1.3305. Support was expected at June 11th low, 1.3233, while resistance was to be met at current session high, 1.3376.
Minutes ago official report said that Producer Price Index (PPI) in the United States rose by 0.5% in May on a monthly basis, exceeding preliminary estimates of a 0.1% rise, while the indicator recorded a 0.7% drop in April. In annual terms, producer prices rose by 1.7% in May, also above expectations of a 1.4% increase, while the index added only 0.6% to its value during the preceding period.
Core Producer Price Index (PPI) in the United States rose by 0.1% in May on a monthly basis, in line with projections and confirming the result during the previous month. Speaking in annual terms, the index added 1.7% in May, also meeting estimates and the recorded value during the previous period.
The data came one day after stronger-than-expected US economic reports bolstered expectations that the Federal Reserve Bank will unwind its asset purchasing program later this year. The Department of Labor in the United States said on Thursday that the number of people, who filed for unemployment assistance last week fell by 12 000 to 334 000. Projections pointed a smaller drop in the number of jobless claims to 345 000.
Meanwhile, annual inflation rate in the single currency zone increased during May, as according to Eurostats harmonized methodology the final index of consumer prices stood at 1.4%, compared to 1.2% in April, meeting preliminary estimates. In March inflation rate was 1.7%. Higher were the prices of fruits, vegetables and electricity, while prices of telecommunications, fuel and medical services lowered the most. In monthly terms, the Harmonized index of consumer prices rose by a mere 0.1% in May. In EU inflation was at the rate of 1.6% in May, rising from 1.4% in April on annual basis. The lowest prices of consumer goods and services were recorded in Latvia, Greece and Cyprus, while in Romania, Estonia and Netherlands prices were higher.
Additionally, due to the sharp decrease in the number of employed people in the Euro zone during Q1, Employment rate fell to its lowest level in the past seven years. Official data outlined the possible problems, which the single currency zone could encounter in a longer term, as this could put recent optimism to a hault. Eurostat reported that the number of employed dropped by 0.5% during the first three months of this year, compared to Q4 2012, as this was the most considerable decline since the second quarter of 2009. The number of employed people remained 145.1 million or the lowest level since the last quarter of 2005. The indicator recorded the weakest value in Greece, where the number of people employed dropped by 2.3% on a quarterly basis, as well as in Portugal – by 2.2%. In countries like Spain, Italy and Cyprus employment rate declined by 1%, as their economies had been experiencing most severely the impact of the financial crisis in the euro region. On the other pole were countries like Germany and Austria, where employment rate continued to rise.
The euro was steady against the British pound, with EUR/GBP pair erasing only 0.01%, falling to 0.8505.
Later on Friday the United States was to publish a report on industrial production and preliminary data from the University of Michigan on consumer sentiment.
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