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

Published 06/02/2020, 14:07
Updated 06/02/2020, 14:09
© Reuters.  FOREX-Euro near two-month lows on German data, options
EUR/USD
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* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee

LONDON, Feb 6 (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.

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.

AUSSIE UP

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.

EURUSD and CESI https://tmsnrt.rs/2tyTER0

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