Euro Economy Weakening

The generally weak Euro-zone data will make it difficult for the Euro to regain momentum in the short term.

The Euro pushed to just above the 1.58 level against the dollar in early Europe on Thursday, but was unable to sustain the gains and generally drifted weaker during the day. Energy and gold prices again had an important impact on the US currency.

Oil advanced to a new record high in Asia around US$135 per barrel before a retreat. As gold prices also weakened, there was increased pressure for a Euro correction weaker while there was also pressure for a correction after recent gains.

The latest Euro-zone industrial orders data recorded a 1.0% monthly decline for a 2.5% annual fall, maintaining the recent weak trend. Although the German evidence has been generally firm this week, data from other Euro-zone economies has been less favourable, illustrating the risk of further divergence within the Euro area.

The Euro-zone PMI index for the manufacturing sector weakened to 50.5 in May from 50.7 while the services-sector index dipped sharply to 50.6 from 52.0 and suggests that the economy has stalled given that both sector are close to the 50.0 level. There was also a further reported decline in French consumer spending.

Investica

Posted in: Economy,Finance and Investment,Forex