Euro Dips As Eurozone Business Activity Shrinks To Record Low
The euro depreciated against its major counterparts in European
trading on Thursday, as a sharp slump in business activity in the
euro area due to strict lockdown measures to combat the coronavirus
outbreak sparked fears about a global recession.
Flash survey results from IHS Markit showed that Eurozone
business activity contracted to another record low in April amid
The flash IHS Markit composite output index plummeted to an
all-time low of 13.5 in April, down from a prior record low of 29.7
in March. A score below 50 indicates contraction.
The reading was expected to fall moderately to 25.9 in
The German private sector shrank the most on record in April as
both services and manufacturing recorded decreases in output due to
the COVID-19 lockdown.
The headline flash composite output index declined to 17.1 in
April from 35.0 in March. This was the lowest reading since
comparable data were first compiled more than 22 years ago.
The score was forecast to drop moderately to 28.8.
European leaders are due to discuss further stimulus measures to
deal with the economic shock from the pandemic.
In economic releases, survey results from the market research
group GfK showed that German consumer confidence is set to reach a
historic low in May due to the coronavirus pandemic and the control
measures taken to curb the virus.
The forward-looking consumer sentiment index fell to -23.4 in
May from revised 2.3 points in April.
The currency showed mixed performance against its major
counterparts in the Asian session. While it rose against the
greenback and the yen amid rebounding oil prices, it dropped
against the pound and the franc.
The euro lost 0.4 percent against the greenback, falling to over
a 2-week low of 1.0779. The pair had finished Wednesday's deals at
1.0823. The euro is likely to face support around the 1.05 region,
if it falls again.
The euro fell to 115.97 against the yen, its weakest level since
September 2019, and registered a 0.5 percent drop from Wednesday's
closing value of 116.60. Immediate support for the euro is likely
seen around the 112.00 level.
Final data from the Cabinet Office showed that Japan's leading
index rose more than initial estimate in February.
The leading index, which measures the future economic activity,
rose to 91.7 in February from 90.7 in January. According to initial
estimate, the reading was 82.1.
The EUR/GBP pair was down 0.6 percent at a 3-day low of 0.8721.
The pair was quoted at 0.8775 at Wednesday's close. The euro is
seen facing support around the 0.86 mark.
Data from the Office for National Statistics showed that the UK
budget deficit for the financial year ended March 2020 exceeded the
Public sector net borrowing increased GBP 9.3 billion from the
last year to GBP 48.7 in the financial year ended March. This was
above the GBP 47.4 billion borrowing projected by the Office for
The European currency hovered at a 2-day low of 1.0511 against
the franc, compared to yesterday's New York session close of
1.0515. Extension of the euro's downtrend may lead it to a support
around the 1.02 region.
After climbing to 1.5348 at 8:45 pm ET, the euro fell 0.8
percent to a 6-day low of 1.5223 versus the loonie. The euro was
trading at 1.5326 per loonie at yesterday's close. Further decline
in the euro may locate support around the 1.50 area.
The euro dipped against the aussie to its lowest level since
March 6, at 1.6947. The euro-aussie pair was worth 1.7090 at
Wednesday's close. Should the euro falls further, it is likely to
test support around the 1.60 region.
Following a 1-week rise to 1.8282 at 8:15 pm ET, the euro pulled
back against the kiwi, touching a 2-day low of 1.7988. At
Wednesday's trading close, the pair was quoted at 1.8183. The euro
is likely to challenge support around the 1.70 mark.
Looking ahead, the U.S. weekly jobless claims for the week ended
April 18 and new home sales for March will be featured in the New
Euro vs NZD (FX:EURNZD)
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Euro vs NZD (FX:EURNZD)
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