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Forex - EUR/JPY drops on French growth data, looks past Japan data

Published 12/28/2012, 03:05 PM
Updated 12/28/2012, 03:06 PM
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Forexpros - The euro slumped against the Japanese yen on Friday after French gross domestic product figures came in slightly weaker than expected.

Bottom fishers snapped up nicely price yen positions as well on sentiment that currency has weakened enough on talk of policy loosening.

In U.S. trading on Friday, EUR/JPY hit 113.81, down 0.16% and up from a low of 113.30 and off a high of 114.70.

The pair sought to test support at 113.30, the earlier low, and resistance at 114.70, the earlier high.

In Europe earlier, the Markit research group reported that the eurozone's retail purchasing managers' index fell to 44.5 in December from 45.8 the previous month.

Elsewhere, official data revealed that French consumer spending rose 0.2% in November, more than market forecasts for a 0.1% increase and up from a 0.1% decline the previous month.

Also in France, however, the country's gross domestic product rose less than expected in the last quarter.

The country's National Institute for Statistics and Economic Studies said that French GDP rose by a seasonally adjusted 0.1% in the third quarter from 0.2% in the preceding quarter.

Analysts were expecting French GDP to rise 0.2% in the third quarter.

The yen has come under pressure lately on expectations that Japanese Prime Minister Shinzo Abe will push for more monetary easing at the Bank of Japan.

Bottom fishers sent the Japanese currency rising on Friday, especially as demand for safe-haven currencies picked up due to fiscal uncertainty in the U.S..

Failure in Washington to resolve a budgetary impasse could result in tax breaks expiring at the close of 2012 right when automatic cuts to government spending kick in, a combination known as a fiscal cliff that could push the U.S. into a recession next year.

Recent data pushed the yen down in earlier sessions as well.

The Markit research group said that Japan's purchasing managers' index deteriorated to 45.0 in December from a reading of 46.5 the previous month.

A separate report showed that industrial production in Japan dropped far beyond expectations in November, declining 1.7% after a 1.6% increase the previous month. Analysts had expected industrial production to fall 0.5% last month.

Official data also revealed that Japan's retail sales rose by 1.3% in November, more than the expected 1.1% increase, after a 1.2% drop the previous month.

Elsewhere, the euro was down against the pound and flat against the Canadian dollar, with EUR/GBP trading down 0.44% at 0.8186 and EUR/CAD trading down 0.01% at 1.3174.








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