The Euro to US Dollar (EUR/USD) exchange rate was hammered lower again by disappointing Eurozone data to send the currency pair sliding back towards a 2-year low.
Evidence is building that the Eurozone is weakening at an alarming rate and fears are growing that the 18-member currency bloc is sliding towards a triple dip recession. The latest retail sales and business growth figures did little to ease the worry.
Germany, the so called powerhouse or engine of the Eurozone economy continues to falter as data released early in Wednesday’s session showed that retail sales tumbled by 3.2% in September. The high figure meant that Germany was the worst performer with Portugal coming in behind with a drop in sales of 2.5%.
Malta, Luxembourg, Hungary and Slovakia saw the highest increases in total retail trade, while Finland, Poland, Denmark, and Germany recorded the largest decreases.
According to Eurostat, retail sales across the entire region declined much more than forecast by 1.3% on a month on month basis and rose by just 0.6% on an annual basis.
Also weighing heavily upon the Euro was Markit’s composite PMI data, which inched higher to a reading of 52.1 from the preceding month’s result of 52. The rise was below economist expectations for an outcome of 52.2.
Market attention is now turning to Thursday’s European Central Banks policy meeting outcome. With a run of poor data releases, the central bank is coming under increasing pressure to take action to try to remedy the situation.
‘Today’s data provided more evidence that the Eurozone economy remained very weak in the third quarter. What’s more, there are few early indications of an improvement in Q4, putting additional pressure on the ECB to provide more policy support,’ said European economist at Capital Economics Sarah Pemberton.
US Dollar Surges on ADP Jobs Data
The US Dollar strengthened strongly against the Euro and most other currencies after data showed that the US private sector created an extra 230,000 jobs in October; the biggest rise recorded since June and exceeded expectations. Economists had been forecasting for a figure of 220,000.
‘The job market is steadily picking up pace. Job growth is strong and broad-based across industries and company sizes. At this pace of job growth unemployment and underemployment is quickly declining. The job market will soon be tight enough to support a meaningful acceleration in wage growth,’ said Mark Zandi, chief economist at Moody’s Analytics.
The data adds to the diverging trends of the US and Eurozone economies.
Further gains for the US Dollar are likely with the release of the latest ISM Non-Manufacturing PMI report.
Euro Exchange Rate News:
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