The euro advanced to the strongest level against the US dollar, as Fridays better-than-expected labor market data fueled risk appetite, making the demand for safe-haven currencies like the US dollar less attractive. Meanwhile, released economic indicators in Germany and the Euro zone showed an uneven economic recovery in the 17-nations common area.
Having hit the strongest level since October 31st at 1.3729 at 09:15 GMT, EUR/USD traded at 1.3725 at 12:58 GMT, gaining 0.15% for the day. Support was likely to be found at December 6th low, 1.3621, while resistance was to be met at October 31st high, 1.3738.
According to a report by the German federal statistical office, Destatis, German trade balance deteriorated in October to 17.3 billion euro, from a revised downwards 20.3 billion euro from initial estimates of 20.4 billion euro last month. The median analysts estimates pointed that the trade balance will reach 18.3 billion euro this month.
A report by the market research group, Sentix, revealed an unexpected investors confidence decline in the Euro zone for December. The Sentix index declined to 8.0 this month from a reading of 9.3 in November. Analysts projected that the index will increase to 10.4 this month. On the index, a level above 0.0 indicates optimism, below indicates pessimism. The report raised concerns over the Euro zone economic outlook. The seasonally adjusted trade balance also disappointed with a reading of 16.8 billion euro, short of analysts projections of 17.4 billion euro and lower than last month downwardly revised value of 18.7 billion euro.
The German federal statistical office released a report, showing that the nations industrial production fell by a seasonally adjusted 1.2% in October, confounding analysts expectations for a 0.8% gain. Industrial production for September was revised to a 0.7% drop from an initial estimate of 0.9% decline. German industrial production for the past twelve months didnt meet the analysts projections of 3.1% gain in October and increased by only 1.0%, after increasing to 0.6% in September.
Meanwhile, last Friday a number of economic indicators were released showing that US economy is strengthening at a faster-than-expected pace.
U.S. employers added more jobs last month than projected. Non-farm payrolls jumped to 203 000, confounding expectations of a lesser number of jobs, 183 000, while in October the job number has been downwardly revised to 200 000. The progress in the labor market will probably provide a spark for the US economy, analysts expected.
The recovering labor market led to improving sentiment and higher spending, despite a 0.1% decline in household income. Household spending, which accounts for 70% of the economy, rose by 0.3% in October, beating both projections and last month’s increase of 0.2%.
US average hourly earnings increased to 0.2% in November from the previous month to reach $24.15, a 2% yearly increase. Average weekly hours for all workers also increased, from 34.4 in October to 34.5 in November.
Core personal consumption expenditures (PCE) met analysts projections on both monthly and annual basis, jumping by 0.1% and 1.1% in October, respectively.
Investors awaited the separate statements of the President of Federal Reserve Bank of St. Louis, James Bullard, the President of the Federal Reserve Bank of Richmond, Jeffrey Lacker and the President of the Federal Reserve Bank of Dalas, Richard Fisher due later today.
Elsewhere, USD/JPY hit a session high at 103.18 at 08:18 GMT, gaining 0.31% on a daily basis. Support was likely to be received at December 6th low, 101.72, while resistance was to be encountered at December 3rd high, 103.38, the strongest since May 23rd.