This morning the Euro extended gains against the US Dollar and advanced on several of its other most traded peers as the Eurozone’s economic outlook was brightened by several manufacturing reports.
The Euro Exchange Rate was in the region of 1.3019 against the US Dollar as of 10:35 am GMT
While manufacturing in Germany and France was shown to have contracted by less-than-expected, the rate of contraction also eased in the Eurozone as a whole.
Although economists predicted that the gauge of manufacturing activity for the 17-nation currency bloc would remain unchanged from April’s 47.8 it actually rose to 48.3 in May – taking it closer to the 50 mark which separates growth from contraction.
In a statement issued alongside the report Chris Williamson, a chief economist with Markit, commented: ‘Although the euro area manufacturing economy continued to contract in May, it is reassuring to see the rate of decline ease to such a marked extent. The sector still seems some way off stabilising, however, and therefore remains a drag on the economy. Despite the final PMI coming in above the flash reading, the surveys still suggest that GDP is likely to have fallen 0.2% in the second quarter, extending the region’s recession into a seventh successive quarter.’
Not that cheery, but Williamson did continue with: ‘Policymakers will nevertheless be pleased to see the downturn not getting any worse, suggesting the ECB will see no immediate need for further action at its June meeting. In particular, the surveys brought good news in terms of signs of stabilisation in Germany and export-led growth in Italy and Spain’.
Although manufacturing PMI for France rose from 45.5 to 46.4, defying economists’ expectations for stagnation, the report intimated that the nation remains a key concern. The second largest economy in the Eurozone has recorded a steeper rate of contraction than either Italy or Spain this year and employment levels continue to fall.
A separate report showed German manufacturing PMI rose modestly from 49.0 to 49.4 last month.
After the data was published the Euro advanced on several of its most traded peers, achieving 1.3043 against the US Dollar.
The common currency was also supported by comments issued by European Bank President Mario Draghi regarding the likelihood of the Eurozone entering economic recovery by the end of this year.
In a recent speech Draghi stated: ‘There are a few signs of a possible stabilization. Our baseline scenario continues to be one of a very gradual recovery starting in the latter part of this year. […] The drivers of such a gradual recovery are the highly accommodative monetary policy and export growth, caused by growing foreign demand.’
However, gains against the Pound were limited as the British currency also broadly strengthened in response to better-than-anticipated domestic manufacturing figures.
Although there are several pieces of influential Eurozone data scheduled for release this week, economists will largely be focusing on the European Central Bank’s rate decision on Thursday. While the central bank is not expected to issue an additional rate cut, the tone of the statement accompanying the decision will be of interest.
Current Euro (EUR) Exchange Rates
< Lower > Higher – Little Changed
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3019 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8533 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.3519 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6322 >
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7680 <
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1719 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7394 <
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6117 <
(Correct as of 10:35 GMT)
Comments are closed.