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Euro Exchange Rate Falls on Poor Consumer Confidence Figures

Eurozone Business Climate Indicator, Consumer Confidence, Industrial Confidence & Economic Confidence figures all come in worse than expected in March.

Yesterday Italian PM Mario Monti told a press conference in Japan that the Eurozone was reaching the end of the sovereign debt crisis, however his optimism seems a little naive considering the gargantuan task that still remains if the 17-nation bloc is to return to growth anytime soon. To put it bluntly the deteriorating economies of Greece, Spain, Portugal, Ireland and Italy offer fierce resistance to any kind of fiscal revival in the Eurozone.

This prevailing view of continued negativity / pragmatism appears to be backed up by today’s Eurozone confidence figures which came in worse than expected for March. Eurozone Business Climate Indicator fell by -0.30 compared to an expected fall of -0.16. Eurozone Consumer Confidence fell by -19.1 compared to a fall of -19 last month. Eurozone Industrial Confidence fell by -7.2 whereas a drop of only -5.8 was predicted. And Eurozone Economic Confidence came in at 94.4 compared to an expected figure of 94.5.

As the Eurozone data is broken down to its 17-nation constituents, it becomes apparent that it is the aforementioned struggling ‘club med’ nation states that are bringing the figures down, whilst Germany – the economic powerhouse at the helm of the single currency – featured the strongest figures by far.

Inflation across Europe has grown higher than anticipated and a slowdown in Manufacturing Production has combined with this to lower European Consumer Confidence as a whole. This could prove toxic to the currency bloc and its already-fragile strives towards economic growth.

The Euro Exchange Rate fell by around a third of a cent against both the Pound and the US Dollar on the back of today’s figures. The Pound to Euro Exchange Rate is currently 1.195 (12:43). The Euro to US Dollar Exchange Rate is currently 1.328 (12:43).