The Euro to US Dollar (EUR/USD) exchange rate weakened to its lowest level in more than two years on Monday after disappointing Purchasing Managers Index data out of the Eurozone weakened sentiment towards the single currency.
Concerns over the economic strength of the Eurozone have seen the Euro weaken against the majority of its most traded peers.
The Euro weakened against the US Dollar after the Markit research group showed that the German manufacturing PMI ticked higher from September’s figure of 49.9 to 51.4. That improved figure was quickly wiped out as separate PMI reports from France, Italy and Austria all came in below economist expectations. The faltering of the Eurozone economy has increased pressure on the European Central Bank (ECB) to take more action to stimulate growth and inflation across the stagnating currency block.
Best and Worst Performing EU Nations
Ireland was the best performing nation in the Eurozone with its PMI rising to a two-month high level of 56.6. The Netherlands saw a 3-month high of 53.0 and Spain’s PMI remained unchanged at 52.6. The worst performers were Italy, which saw its PMI fall to a 17-month low, France’s dropped to 48.5 and Austria’s tumbled to a 24-month low of 46.9.
The wider Eurozone PMI rose to 50.6 in October. The rise was below forecasts for a figure of 50.7.
EUR/CAD Exchange Rate softens on Canadian PMI
Against the Canadian Dollar, the Euro fell after the latest manufacturing PMI report compiled by the Royal bank of Canada came in better than economist forecasts. The data showed that Canada’s manufacturing PMi improved to a reading of 55.3 in October, better than the preceding months figure of 53.5 and was better than the 53.07 figure forecast by economists.
EUR/USD Exchange Rate Forecast
The Euro is forecast to weaken further against the US Dollar over the course of the week as traders turn their attention to Thursday’s European Central Bank policy meeting. The ECB is forecast to leave interest rates unchanged at the record low level of 0.05%. The statement that will follow will be closely watched for any signs suggesting that policy makers are edging closer to introducing a full-scale quantitative easing programme.
Concerns are also mounting amongst economists over the growing popularity of anti-EU political groups. Joining the strengthening UKIP is Frances National Front, Germany’s Alternative for Germany Party and Spains Podemos party. With dissatisfaction, growing amongst EU voters’ uncertainty is growing as to whether the union will remain in its current form over the coming years.
Euro Exchange Rate News:
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