The Euro to Pound Sterling (EUR/GBP) exchange rate advanced on Wednesday after upbeat Markit Eurozone and UK Manufacturing Purchasing Managers Indexes (PMI) emerged, while the Euro to Japanese Yen (EUR/JPY) exchange rate also climbed, the Euro to Swiss Franc (EUR/CHF) exchange rate was trading lower after upbeat PMI.
Wednesday kicked off with Japan’s Tankan Large Manufacturers Index remaining at 12 in the first quarter rather than increasing to 14 as forecast. The Tankan Large All Industry Capex also printed unfavourably when it registered -1.2% contraction instead of the +0.5% growth predicted after the previous +8.7% expansion.
Economist Marcel Thieliant stated: ‘We already have had a lot of hard data for Q1, which tend to provide more reliable indications about the pace of Gross Domestic Product (GDP) growth than the Tankan, and suggest that economic activity slowed last quarter.’
Industry expert Peter Boardman also commented on the weaker ecostats, saying: ‘What [the weak result] does is the Yen could weaken even further… some people say it could go back to 130 as the Bank of Japan sees this number and says “let’s just print money”.’
The Japanese Yen to Euro (JPY/EUR) and Japanese Yen to Pound Sterling (JPY/GBP) exchange rates could be in for hefty fluctuations on Thursday with the release of Japanese Monetary Base, Buying Foreign Bonds and Buying Foreign Stocks ecostats.
Swiss Franc to Euro (CHF/EUR), Pound Sterling (CHF/GBP) Exchange Rates Rise on PMI
Meanwhile, the Swiss Franc remained buoyant against a host of other majors after the SVME Purchasing Managers Index improved by more than economists had forecast. The index rose from 47.3 to 47.9 in March, rather than residing at 47.5 as predicted.
Switzerland’s manufacturing sector took a tumble in activity after the Swiss National Bank (SNB) removed the cap between the Euro and the Swiss Franc (EUR/CHF) but March showed a slowdown in that decline. The move by the SNB caused massive swings in the Swiss Franc to Pound Sterling (CHF/GBP) and Swiss Franc to Euro (CHF/EUR) exchange rates.
Survey author Credit Suisse stated: ‘The stabilisation of the PMI is probably due to the stabilisation in the exchange rate.’
‘Swiss industry clearly seems capable in the present environment shaped by a global recovery of coping with a EUR/CHF exchange rate below 1.10 and a USD/CHF rate around parity.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Tumbles on ONS Productivity Data
Meanwhile, the Pound Sterling took an almighty dive on Wednesday despite Markit’s UK Manufacturing PMI reaching a 10-month high. The manufacturing index rose from a negatively revised 54.0 to 54.4 in March.
However, the Pound’s bearish nature was accredited to the Office of National Statistics stating that fourth quarter productivity fell by 0.2% which is ‘unprecedented in the post-war period’.
If reducing corporation tax increases wages and investment, then why have real wages and productivity been taking a hammering?
— Simon Parker (@SimonFParker) April 1, 2015
The Pound Sterling exchange rate tumbled against the Euro (GBP/EUR), Swiss Franc (GBP/CHF) and Japanese Yen (GBP/JPY) as investors shied away from weak growth.
Euro Exchange Rate Forecast: EUR/GBP, EUR/CHF, EUR/JPY
The Euro is likely to be in for some major movement over the next few weeks with Greece attempting to renegotiate its austerity deal before it runs out of funds at around Easter time.
Furthermore, an event that’s caught investors’ eyes is the meeting between Russia and Greece scheduled for next week. If Greece turns to Russia for financial aid, Greece could very well leave the Eurozone—a development that could be catastrophic for the Euro exchange rate.
The Euro to Japanese Yen (EUR/JPY) exchange rate is reaching 129.1600. The Euro to Swiss Franc (EUR/CHF) exchange rate is trading at 1.0431; the Euro to Pound Sterling (EUR/GBP) exchange rate is trending in the region of 0.7277.
