Euro slipped from 3.5-month high versus the US dollar

On Wednesday euro climbed to 3.5-month high against the US dollar at 1.3335, followed by a slip to 1.3285 during European afternoon trade. The pair was 0.21% down for the day.

Euro came under pressure as peripheral euro zone bond yields kept their upward movement. Italys borrowing costs rose to the highest level since March at an auction of 12-month government bonds on Wednesday.

Earlier it was reported that Industrial Production in the Euro zone rose at a slower rate in April on a monthly basis, compared to March, 0.4% versus 0.9%, while projections showed no monthly change. This was the third consecutive month of production increase, which could submit a signal that the deepest and most prolonged recession in the euro region since World War II might be heading for its end. Industrial production registered an increase mostly in Germany and France, first and second largest economies in the single currency zone. Quite the opposite was situation in countries, that had experienced the most severe impact on their economies by the financial crisis in the region. In Greece, Portugal, Italy and Spain industrial production declined in April. In annual terms, the industrial activity indicator dropped by 0.6% in April, but however, managed to shrink this drop in comparison with the revised data during the previous period, that stated a 1.4% decrease. Preliminary estimates showed a drop by 1.2%.

Additionally, consumer inflation reports in the first four biggest economies in the Euro region caused influence on the common currency today. Data stated that inflation in Germany increased during May, but remained still below the targeted 2% by the European Central Bank, a rate taken as a benchmark for price stability. The Final Consumer Price Index (CPI) in Germany rose to 1.5% in May on annual basis, confirming projections, while in April the index stood at 1.2%. Estimated in accordance with the harmonized methodology, the index of consumer prices climbed to 1.6% in May annually, slightly below expectations of a rise to 1.7%. Major factor for these results was the rise in prices of first necessity goods in May, which jumped by 5.4% on annual basis. Energy prices also rose by 1.6% in May on annual basis.

Harmonized Index of Consumer Prices (HICP) in Spain also recorded a higher value, climbing to 1.8% in May on annual basis, meeting projections. The index was at 1.5% during the preceding period. Consumer prices inflation in the country was also confirmed during May, 1.7%, above the April level of 1.4%. In monthly terms, consumer prices were 0.2% higher in May, while according to harmonized methodology, consumer inflation in Spain rose by 0.1% during the same month. Both indicators met their preliminary estimates, announced on May 30th.