The European common currency rallied against its major rivals ahead of the European session on Friday after an official data showed that Germany’s producer price inflation accelerated in October from the previous year.
The Federal Statistical Office said today that the producer price index rose 4.3% year-on-year in October, faster than a 3.9% growth in the previous month. Producer prices increased for the seventh consecutive month. Economists had expected inflation to rise to 4.1%.
The latest annual growth was mainly due to rise in prices of energy, the Destatis said. Energy prices increased 0.7% on a monthly basis and grew 7.2% over a year ago.
Excluding energy, producer prices were up 3.1% annually in October and rose 0.2% from the preceding month. Petroleum products prices grew 11.9%.
Compared to September, the PPI rose 0.4% in October, faster than a 0.3% rise in the previous month. Economists had expected an increase of 0.3%.
The euro extended gains against the US dollar after the data and pushed to a 4-day high of 1.3692 around 2:25 am ET, improving from Tuesday’s 7-week low. The next upside target for the euro-buck pair is likely to be seen around the 1.3750 level.
Federal Reserve Chairman Ben Bernanke has launched a strong defense of the central bank’s new asset purchase program amid a barrage of criticism at home and abroad.
In the text of a speech to be delivered on Friday at a central banking conference in Frankfurt, Bernanke said more monetary easing was necessary to bring down high unemployment in U.S., even as he admitted there were limits to what can be achieved by the central bank alone.
“On its current economic trajectory the United States runs the risks of seeing millions of workers unemployed or underemployed for many years,” Bernanke said. “As a society, we should find that outcome unacceptable.”
The euro that moved off an 11-day high against the yen in late Asian deals snapped back shortly following the data and stabilized around the 114.10 area. On the upside, the euro-yen pair may test immediate resistance around the 114.15 level and a longer-term target at 114.70.
Japanese all industry activity dipped 0.8% on a monthly comparison in September, following a 0.2% drop in August. The decline in September was bigger than the consensus forecast of 0.6% decrease.
On a yearly basis, all industry activity growth slowed to 2.6% from 3.7% in August.
The single currency also touched 1.3598 against the Swiss franc and 0.8523 against the pound around 2:50 am ET, up from a session’s lows of 1.3553 and 0.8498, respectively hit earlier in the session. On the upside, the euro may find target levels at 0.8545 against the pound and 1.3640 versus the franc.
Looking ahead, Italian industrial new orders and sales for September and speeches from a number of Central Bank officials from Europe and the U.S. will garner market attention in the upcoming trading hours.
The Federal Reserve Chairman Ben Bernanke’s speech at the European Central Bank around 5:15 am ET will also be closely watched by market players.
There are no major economic data due out in the North American session today.