EUR/USD and EUR/GBP Weaken on PMI Revisions
On Monday the Euro to US Dollar (EUR/USD) and Euro to Pound (EUR/GBP) exchange rates eased lower as revised Manufacturing PMI’s for the Eurozone and its largest economies reignited concerns regarding the solvency of the currency bloc.
At the close of last week the Euro to US Dollar exchange rate fell as investors reacted to a run of positive ecostats for the US and Germany published concerning retail sales figures.
The Euro to Pound Sterling exchange rate was also struggling on Friday and the Pound was able to push back above the 1.27 level against its European peer.
As a fresh week of trading got underway the Euro consolidated and extended declines against its two major rivals.
The Euro broadly softened as manufacturing data for the currency bloc as a whole and its most influential economies was released.
It had been expected that the final figures for October would be little changed from the original flash estimates. However, some notable alterations were made.
France was the only one of the Eurozone’s three largest economies to have a positive alteration, with its manufacturing index being adjusted from 47.3 to 48.5.
Italy’s own index was slashed below the 50 mark separating growth from contraction, being revised to 49.0 from 50.7.
Germany, the most influential nation in the currency bloc, had its manufacturing PMI reduced from 51.8 to 51.4.
This took the Eurozone’s own index down from 50.7 to 50.6.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7804
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2809
In a statement issued with the figures Markit economist Rob Dobson noted; ‘The performance of Eurozone manufacturing remained broadly flat at the start of the final quarter, as the sector struggles to recover the traction lost following its mid-year slowdown. Manufacturing is therefore unlikely to provide any meaningful boost to the currency union’s anaemic GDP growth.’
He continued; ‘Not surprisingly, this is forcing firms to focus on cost-cutting and competitiveness, at the expense of employment and margins, as they strive to boost sales volumes. This is likely to hold up the already high unemployment rates across much of the currency union, as firms lack the profitability and demand requisite to expand capacity.’
Euro to Pound Sterling (EUR/GBP) Beaten back by UK Stats
Weakness in the Euro to Pound Sterling (EUR/GBP) exchange rate persisted as the UK’s Manufacturing PMI unexpectedly jumped to a three-month high in October.
The index had been expected to soften from 51.6 to 51.4 However, it actually came in at 53.2 as domestic demand improved and new business accelerated.
The Pound was broadly bolstered by the report.
Euro to US Dollar (EUR/USD) Fluctuations Ahead
Before the close of the local session the Euro to US Dollar (EUR/USD) exchange rate could experience movement as a result of several influential US reports, including the nation’s Construction Spending figures and final Markit Manufacturing PMI.
The ecostat with the most potential to cause EUR/USD movement is the US ISM Manufacturing figure. While the measure is believed to have softened from 56.6 to 56.2, US reports have had a habit of surprising to the upside of late. If that proves to be the case again today, the EUR/USD exchange rate may slide further.
ECB Forecast to Comment on QE
In the days ahead the Euro is likely to continue feeling under pressure as investors focus on the upcoming European Central Bank interest rate decision.
While the central bank is largely expected to leave interest rates unchanged, concerns that Germany is on the brink of recession could see the central bank outline fresh quantitative easing measures.
If the central bank finally gives in to buying government backed securities, widespread Euro declines are likely to occur.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7820,
Euro,,US Dollar,1.2497,
Euro,,Canadian Dollar,1.4112,
Euro,,Australian Dollar,1.4366,
Euro,,New Zealand Dollar,1.6116,
US Dollar,,Euro ,0.8002,
Pound Sterling,,Euro,1.2785,
Canadian Dollar,,Euro,0.7073,
Australian Dollar,,Euro,0.6968,
New Zealand Dollar,,Euro,0.6200,
[/table]
