The Euro has slumped to a six-week low against the US Dollar after the single currency was battered by disappointing PMI data.
According to Markit Economics the Euro area services index for the Eurozone showed a sharp contraction in the region’s economic activity. It fell from 48.6 in January to 47.3 in February, far off target from the expected figure of 49.
Today’s data has highlighted the growing gap between the region’s top two economies. The economic divide between France and Germany is growing suggesting that the Eurocrisis has contaminated the heart of the currency bloc.
Chris Williamson of Markit highlighted the growing divide between Germany and France.
“Digging into the data shows increasing schisms within the Eurozone. National divergences between France and Germany have widened so far this year to the worst seen since the survey began in 1998. Germany is on course to grow in the first quarter. In contrast, Frances’s downturn is likely to deepen, bringing the euro area’s second-largest member more in line with the periphery than with the now solitary-looking German ‘core’.”
Manufacturing in the Eurozone’s biggest economy expanded by a smaller margin than economist had been predicting causing the Euro to fall for a second day against the US Dollar and weaken against the majority of its peers.
German based manufacturing showed signs of expansion after it came in at 50.1 for February. A number above 50 signals contraction, a figure below signals contraction. The figure is an improvement on January’s figure of 49.8. Economists had been predicting a rise to 50.5. Germany’s service sector however declined to 54.1 in February from the 55.7 recorded in January.
“The outlook in the Euro area remains weak,” said Melinda Burgess, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. “ECB policy will have to be looser and this will weigh on the Euro.”
Against the Japanese Yen the single currency weakened for a third day due to speculation that the European Central Bank will be forced to keep borrowing costs lower for longer to help kick-start a recovery.
Current Euro exchange rates
As of 09:50 am
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8667
The Euro to US Dollar exchange rate is currently trading in the region of 1.3188
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2881
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5811
The Euro to Canadian Dollar exchange rate is currently trading in the region of 1.3441
The Euro to Japanese Yen exchange rate is currently trading in the region of 123.1506
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