The Single European Currency had a mixed day on Wednesday, up against the USD, CAD and GBP, little changed against the AUD but down against the NZD. In early European trade as stock markets tanked, EUR/USD fell to test Tuesday’s low just below 1.2260 but then rallied as stocks recovered, even though it was ultimately unable to hold on to a 1.23 ‘big figure’. Overnight in Asia and this morning in Europe, the pair marginally broke below Tuesday’s low before rebounding a quarter of a cent to 1.2280.
In this morning’s economic data, March saw eurozone economic activity expand at the weakest pace since the start of 2017, as rates of increase moderated in both the manufacturing and service sectors. The final Markit PMI Composite Index posted 55.2 in March, down from 57.1 in February and below the earlier flash estimate of 55.3. The headline index has nonetheless signaled expansion in each of the past 57 months. Manufacturing production rose to the lowest extent since November 2016, whereas service sector business activity increased at the weakest pace since August last year. Markit noted that “National PMI data indicated that the upturn remained broad-based in nature, with output expanding in all of the countries covered. However, signs of a growth slowdown were also widespread, with the ‘big-four’ nations and Ireland all seeing moderations during the latest survey month. March saw the level of incoming new business rise at the weakest pace for 14 months, with slower increases signaled in Germany, France, Italy and Ireland. The pace of expansion held steady in Spain. Growth in new orders remained sufficient to test capacity, however, as indicated by a further solid increase in backlogs of work.”
As for signs of progress towards the ECB’s inflation target, the survey noted, “Price pressures moderated in March, with rates of increase in output charges and input costs both slowing. That said, almost all of the nations reported higher input and output prices during the month, the sole exception being a slight decrease in output charges at Italian service providers… Output charge inflation eased to a three-month low, while costs increased at the slowest pace since last September.” The EUR opens in North America today at USD1.2280 and EUR/CAD1.5685.