The Euro strengthened to an eight-month high against the US Dollar and edged higher against Sterling following the release of better-than-expected retail sales data and as the US government shutdown continues to weigh upon demand for the ‘Greenback’.
According to the European Union’s Statistics office, Eurostat, retails sales jumped by 0.7% in August on a month-by-month basis, on a yearly basis sales improved by -0.3%. The figures were far better than those being forecast by economists who had been expecting a rise of just 0.2% on a monthly basis and a decline of -1.5% on a yearly one.
August proved a particularly good month for the regions struggling members including Spain and Portugal which benefitted from a strong influx of sun seeking tourists. Spain sales jump by 3.8% the strongest rise this year and Portugal saw retail sales soar by 4.8%, the strongest increase since 2009. Despite the improving picture France saw sales tumble from 1.9% to 0.2% from July to August. Sales are up however on the previous year coming in at 1.7% compared to 2012’s figure of 1.4%. Sales also improved in Austria, and Malta but Belgium posted a decline in monthly sales.
The Euro also found support from improved Purchasing Managers Index data which saw growth in the regions service companies increase by its fastest pace since 2011. Germany once again led the way but France and Italy also returned to expansion for the first time in a year.
“With the rate of expansion picking up in September, the survey bodes well for ongoing growth in the final quarter of the year; however the political instability that has reared up in Italy is a reminder that there is plenty of scope for recoveries to be derailed” said Chris Williamson, chief economist at Markit.
The US Dollar meanwhile remains under pressure as fears continue to grow that the federal government shutdown will negatively impact growth in the world’s largest economy. An end to the deadlock seems unlikely as both Republicans’ and Democrats continue to refuse to budge in their dispute.
Tomorrow sees the release of Augusts’ Eurozone Producer Price data which is expected to show a decrease.
Euro (EUR) Exchange Rates
As of 11:05 am
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3606 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8382 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4501 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6413 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4065>