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Euro slips against dollar after Eurozone industrial production misses
Eurozone industrial production fell 0.2% in May versus expectations for a 0.2% increase, while the dollar steadied after recent US CPI data kept September hike odds at 60%, down from 75%.
The euro gave back earlier gains against the US dollar on Wednesday, with EUR/USD easing to just above 1.1420 from session highs near 1.1450, as weaker Eurozone data weighed on currency sentiment, according to FXStreet.
Eurostat reported that Eurozone industrial production contracted 0.2% in May, missing market expectations for a 0.2% rise, following an upwardly revised 0.3% gain in April. On a year-on-year basis, factory output fell 1.2%, after a 0.4% increase in April, and more than double the 0.5% decline forecast by consensus.
FXStreet added that the dollar had been supported by uncertainty around the timing of further Fed action after June’s US CPI showed inflation slowing to 3.5% year-on-year, from 4.2% in May. The same report indicated monthly inflation fell 0.4%, its weakest pace in nearly six years, which led investors to dial down expectations of Fed hikes, with CME FedWatch pointing to a 60% chance of a September increase.
The report also linked broader risk sentiment to ongoing tensions in the Middle East, saying the US has closed the Strait of Hormuz for Iranian vessels and Iran has threatened to close other strategic energy routes, with oil prices pinned near monthly highs.
The lower industrial production reading was framed as a direct signal for the Eurozone manufacturing cycle, since the indicator measures price-adjusted output changes in industry and is commonly used to gauge the strength of the region’s factories.
Latest closeEUR/USD 1.142 ▲0.2%