Following pretty extensive declines against several of its major currency rivals the Euro rallied against safe-haven counterparts the US Dollar and Japanese Yen overnight as traders deemed the currency’s drop too rapid.
The common currency continued to trade lower against the Pound however as the British asset remained buoyed by yesterday’s unexpectedly strong UK services PMI.
Ahead of the release of German and Eurozone services PMI the Euro pared declines against the ‘Greenback’. However, the EUR/USD has still softened by 2.4 per cent over the last few days as investors speculate on the likelihood of the European Central Bank taking additional steps to bolster the Eurozone’s fragile economic recovery.
Some industry experts believe that the central bank is unlikely to intervene in the near future.
According to currency strategist Kara Ordway; ‘The ECB still has a much better balance sheet than the Fed, so I wouldn’t be surprised if we see some Euro strength from here. I can’t see the ECB announcing anything so as long as we don’t see any surprises from them the Euro is likely to find support around these levels.’
The Euro is currently trading against the US Dollar in the region of 1.3492
The majority of economists are forecasting that the ECB will hold its main refinancing rate at 0.5 per cent when it meets tomorrow.
This morning the Euro experienced modest fluctuations as Italian services PMI came in below forecast levels while German and French services PMI exceeded estimates.
In a statement accompanying the data Markit economist Tim Moore asserted; ‘the latest survey indicates a continued improvement in the German economy at the start of the fourth quarter, with the pace of output growth broadly matching the trend seen throughout the summer.’
However, it wasn’t all good news for the Eurozone’s largest economy as Moore also observed; ‘However, subdued employment trends during October highlighted a greater degree of caution in terms of job hiring within the German private sector. Latest data pointed to the most marked drop in staffing levels since June, largely reflecting a return to falling employment numbers across the service economy.’
Eurozone composite PMI also trumped expectations, with the measure coming in at 51.9 rather than the 51.5 expected.
Additional Euro movement can be expected to occur today in response to Eurozone retail sales data. Sales are expected to have declined by 0.4 per cent in September month-on-month following a gain of 0.7 per cent in August.
Euro (EUR) Exchange Rates
As of 09:00
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3492 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8394 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4189 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6101 <
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4104 >