FOREX-Euro near two-month lows on German data, options

LONDON (Reuters) – The euro struggled to stay above a two-month low on Thursday after data showed German industrial orders unexpectedly plunged in December, suggesting the euro zone economy would remain sluggish in the opening months of 2020.

FILE PHOTO: Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this picture illustration, January 21, 2016. REUTERS/Jason Lee/Illustration/File Photo

Contracts German goods fell 2.1% in December from November, the biggest drop since February. A Reuters poll had forecast a 0.6% rise.

Weak data and some large option structures kept investor sentiment subdued. The euro found some support just below $1.10.

The euro and the British pound remained under pressure as tensions rose between the European Union and Britain over a post-Brexit trade deal.

The EU’s markets watchdog asked its British counterpart on Thursday to ensure that ICE Futures Europe and the London Metal Exchange fully comply with EU market transparency rules for commodity derivatives.

On Wednesday, the pound fell after a media report indicated that the EU would look to re-write a major set of European financial regulations known as Mifid II. [GBP/]

“The UK and EU have not begun the formal negotiation process of trade talks, but both sides appear to be doing their best to antagonize the other,” said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC.

Against the dollar, the euro EUR=EBS was steady at $1.09975, not far from the $1.09920 reached last week.

Options amounting to nearly $1 billion are expiring around $1.10 levels later in the day, which is also keeping the cash markets in a tight range, traders said.



The Australian dollar rose for a fourth straight day and the Chinese yuan gained after Beijing unexpectedly said it would reduce tariffs on some U.S. imports.

China said on Thursday it would halve tariffs on some U.S. imports, bolstering hopes the global economy will avoid a major shock from China’s coronavirus outbreak. It also said it hoped to work with the United States to eliminate all tariff increases in future.

That seemed to dispel pessimism about the economic impact of the coronavirus. Still, the number of deaths from the disease rose by 75 on Thursday, almost all of them in China, and media reports this week of a treatment proved to be premature.

Moreover, though infections stood at more than 28,000, RBC’s Lignos noted Thursday was the first day in over a week that new case numbers appear to be stabilising in China.

Against the dollar, the Aussie AUD=D3 advanced 0.1% to $0.6765. The Chinese yuan was trading at 6.9702 yuan per dollar, after weakening to 7 per dollar on Monday.

Broader market volatility fell to new lows, with one-month implied euro-dollar price swings EUR1MO= dropping to a record low of 3.7% this week.

Reporting by Saikat Chatterjee; editing by Larry King

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