The appeal of higher-risk assets like the Euro lessened overnight as another less-than-impressive report from China compounded the concerns inspired yesterday by the fall in the Asian nation’s manufacturing PMI.
China’s services index dropped to 54.6 in December from 56 the previous month, a four-month low.
Although the figure remains above the 50 mark separating growth from contraction, the result highlights the risks posed to the stability of the world’s second largest economy.
The lacklustre reading prompted this response from economist Ting Lu; ‘There was pent up demand in the third quarter and we don’t expect it to be sustained in the fourth quarter’.
After the Chinese data was published the Euro remained softer against the Pound.
EUR/GBP losses were extended during the European session as several pieces of better-than-forecast UK data lifted Sterling against its peers.
The Euro was in line to record a 0.6 per cent five-day decline against the Pound after UK house prices climbed, the level of domestic mortgage approvals advanced and the UK construction sector expanded sharply for another month.
The common currency was also locked in a bearish relationship with its US counterpart having lost ground yesterday as a result of upbeat US employment and manufacturing reports.
Disappointing data from France and disquiet in Latvia also kept pressure on the Euro.
Reports emerging from Latvia indicate that roughly half of the population are against adopting the Euro.
Many members of the public fear that the introduction of the Euro will signal price rises while others resent losing the Lat, as much a symbol of Latvian independence as a currency.
So, while rising commodity prices lent the Euro some support on Friday, the European asset was struggling as investors looked ahead to next week’s major economic news.
Euro volatility can be expected to occur next week as a result of Eurozone/German services PMI, Eurozone consumer confidence and German inflation reports.
Meanwhile, the European Central Bank’s rate decision on Thursday is another big event to be aware of.
The ECB is expected to leave rates unaltered, but any hints regarding the possible introduction of negative interest rates could inspire widespread Euro losses.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3647 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8287 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.5183 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6491 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7327 >
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.2066 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6584 >
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6053 >
(Correct as of 11:30 GMT)
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