Forex News, Fundamental Analysis
October 24, 2012 @ 9:03 am

Euro extends losses on disappointing euro zone PMI data

The euro extended losses against the dollar during the early European trading session following a report on a Purchasing Managers Survey. Softer PMI number reaffirmed investors worries that the European debt crisis  is weighing on economic growth.

PMI for the manufacturing and services industries in the euro zone showed contraction in October, for the ninth month. Also data showed German business confidence hovered close to the lowest since February 2010. Germany is considered to be Europe’s powerhouse, so the weak data dash hopes of it leading the region out of the recession.

The composite PMI index based on a survey of purchasing managers in manufacturing and services industries in the euro area came in at 45.8 in October, the lowest since June 2009 and down from the previous month’s 46.5. Economists had forecast it to be  46.1. Any number below the 50 level indicates a contraction. Above 50 shows expansion. Manufacturing PMI fell to 45.3 from 47.1 and worse than the expected 46.1.

The euro dropped sharply versus the dollar right after the data was released at 0800 GMT.  EURUSD fell 0.4 percent to $1.2935, adding to yesterday’s 0.6 percent loss.  Against yen the euro fell 0.5 percent to  103.17 yen.

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