Euro Rises on Muted Drop in Industrial Production
THE TAKEAWAY: Eurozone industrial production drops 0.8% in April, beats expectations -> Spanish benchmark yields set new 15-year high -> Euro on the rise
Industrial production in the Eurozone was down 0.8% during April, which was still better than the 1.2% fall expected by surveyed analysts. Industrial production for March was revised higher to -0.1%. Compared to April 2011, production was down 2.3%, according to the statistics office of the European Union.
The EC’s 0.8% drop was worse than the EU’s 0.4% drop in industrial production during April. Capital goods led the fall in production, which was down 2.6% in the Eurozone, while energy production was up 6.9%. The biggest decline by country was seen in Portugal, which was down 6.5%, followed by the usually strong Germany which saw a 2% decline in April.
An end to the European debt crisis still seems far off as initial excitement from last weekend’s Spain aid deal has died down and Spanish 10-year bond yields were pushed to 15 year highs yesterday at 6.83 percent. Speculation has risen about the possibility of Italy seeking a similar bailout in the upcoming months.
EUR/USD rose to two-day highs on the lower, yet better than expected, industrial production results. The pair is up today following two days of little market news. Volatile trading is expected in the markets as anticipation builds for the Greek elections this Sunday.
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