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Forex News: Euro Declines As German Yields Tumble; ECB Rehn

Euro Declines As German Yields Tumble; ECB Rehn Suggests More Stimulus

07/04/2019 - 10:38:00 (RTTNews)

(RTTNews) - The euro fell against its major counterparts in the European session on Thursday, as German bond yields fell below the European Central Bank's deposit rate and ECB policy maker Olli Rehn hinted at further stimulus to counter a prolonged slowdown in growth.

Germany's benchmark 10-year government bond yield was down at -0.396%, a record low.

The move signaled market expectations for further rate cuts in the wake of geopolitical uncertainties and weak inflation outlook.

In an interview with Boersen Zeitung, Rehn said that further monetary stimulus is required until there is improvement in economic and inflation prospects.

The recent slowdown in growth should not be viewed as a brief temporary dip in the economy, he told.

"We are experiencing a longer phase of weaker growth," Rehn added.

Data from Eurostat showed that Eurozone retail sales declined unexpectedly in May signaling weak consumer spending in the 19- nation currency bloc.

Retail sales slid 0.3 percent month-on-month in May, following a revised 0.1 percent fall in April. This was the second consecutive fall. Sales were forecast to grow 0.3 percent.

The currency rose against its major counterparts in the Asian session, excepting the pound.

The euro declined to 1.1113 against the franc, from a 2-day high of 1.1138 hit at 9:30 pm ET. The next possible support for the euro is seen around the 1.09 level.

After rising to 1.1295 against the greenback at 10:00 pm ET, the euro reversed direction, falling as low as 1.1273. The euro is seen finding support around the 1.11 mark.

The euro briefly pared gains to 0.8964 against the pound, following an advance to 0.8977 at 2:45 am ET. If the euro drops further, it may locate support around the 0.88 level.

The single currency edged lower to 121.54 against the yen, from a high of 121.72 seen at 4:15 am ET. Further downtrend may take the euro to a support around the 119.00 region.

The euro fell to a 2-1/2-year low of 1.4707 against the loonie, compared to yesterday's closing value of 1.4725. On the downside, 1.46 is possibly seen as the next support level for the euro.

The euro fell back to 1.6045 against the aussie, heading to pierce near a 2-month low of 1.6025 touched at 10:00 pm ET. The euro is poised to find support around the 1.59 level.

Data from the Australian Bureau of Statistics showed that Australia's retail sales logged a marginal growth in May indicating weak consumer spending in the economy.

Retail sales rose 0.1 percent month-on-month in May, offsetting a 0.1 percent drop in April. Sales were forecast to climb 0.2 percent.

The euro retreated to 1.6857 against the kiwi, from a high of 1.6898 hit at 4:30 am ET. This may be compared to more than a 2-month low of 1.6798 touched in the Asian session. Next key support for the euro is likely seen around the 1.66 region.

U.S. stock markets are closed in observance of Independence Day.

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