As the European session began the Euro was already trading below 1.30 against a bullish US Dollar. But following the publication of several pieces of influential Eurozone data, and with speculation surrounding the political situation in Portugal increasing, the Euro broadly softened as trade continued.
The Euro Exchange Rate was in the region of 0.8501 against the British Pound as of 11:10 GMT
The first piece of news weighing on the common currency came from Portugal. The resignation of another high profile member of the nation’s parliament, this time Foreign Affairs Minister Paulo Portas (leader of junior coalition party CDS) widened the already concerning cracks in Portugal’s political structure.
Portas supposedly jumped ship in protest of both the fiscal policy being adopted and the decision to appoint Secretary of State for Treasury Maria Luis Albuquerque as Finance Minister following Vitor Gasper’s resignation.
The uncertain political situation caused Portuguese bonds to slump and the Euro to fall against rivals including the US Dollar and Euro.
The Euro to Pound (EUR/GBP) Exchange Rate hit a low of 0.8474 pence
In response to the common currency’s movement senior currency strategist Paul Robson observed: ‘The Euro is being driven by the headlines coming out of Portugal. In the past markets have penalised currencies where you’ve got political concerns and a weak political backdrop. There’s been a lot of complacency about the Euro-area periphery in general during the liquidity drench which has seen people hunting for yield.’
The Euro was also adversely affected by some disappointing services PMI figures for Germany, Italy and the Eurozone.
Although economists predicted that services PMI for Germany would hold steady in June it actually fell from 51.3 to 50.4. Similarly, services PMI for the Eurozone unexpectedly dropped from 48.6 to 48.3. Meanwhile, Italian PMI dropped from 46.5 to 45.8, despite expectations for an advance to 47.0.
Although French services PMI beat forecasts for stagnation by climbing from 46.5 to 47, the one positive result couldn’t cancel out the negative.
In response to the German services PMI figure senior Markit economist Tim Moore observed: ‘June’s PMI figures could add to concerns that Germany’s private sector has gained only small increments of output growth momentum so far this summer. Manufacturers and service providers have seen an extended period of subdued new business trends, and this has started to weigh more heavily on private sector employment in recent months. The latest drop in total staffing levels was the fastest for almost three-and-a-half years. Another month of private sector job cuts suggests that companies are increasingly cautious about the business outlook, despite the positive direction of output volumes at the end of the second quarter.’
However, declines in the Euro were limited as retail sales in the Eurozone were shown to have declined by less than predicted in May. While the month-on-month gain in sales of 1.0 per cent was considerably better than the 0.3 per cent advance expected, year-on-year retail sales were also revealed to have fallen by 0.1 per cent rather than the 1.9 per cent decline envisaged.
The Euro’s declines were exacerbated as the Pound was supported by better-than-forecast UK services PMI and the US Dollar was broadly stronger ahead of the publication of today’s initial jobless claim and trade balance figures.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.2954 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8501 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4268 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6731 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7720 >
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1766 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7008 <
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.5954 <
(Correct as of 11:10 GMT)
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