Eurozone PMI Steady, France Continues To Lag

The euro remained below $1.37 after the dollar was lifted by promising US housing and factory activity data.

The common currency traded at $1.3647, weighed down by expectations of further easing from the European Central Bank.

Reuters reported that Markit’s Composite Purchasing Managers’ Index revealed that the eurozone’s factory activity eased slightly to 53.9 in May from 54.0 in April. The figure was in line with analysts’ predictions, and despite its modest drop, still signaled strong growth throughout the region.

Germany, the bloc’s largest economy, led the way with a strong reading of 56.1. France, the region’s second largest economy, did not follow suit, and its PMI score fell back below the 50 point mark which denotes expansion.  France’s reading highlighted the concern that the eurozone’s recovery could be uneven.

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Analysts believe the data points to growth of about 0.5 percent in the second quarter, something that would be positive news for the European Central Bank.

However, the bank is widely expected to cut its main interest rate and take the region’s deposit rate below zero in June in order to combat falling inflation.

The euro is also weighed down by worries about the region’s upcoming parliamentary elections. Many are concerned that the region could destabilize as many disgruntled citizens may cast protest votes for radical, anti-austerity, euro-skeptic parties. 

In nations like Italy, where the government is already in a precarious position, poor results for the party in power could create a lot of uncertainty. Most member countries will hold their votes on Sunday and the results will likely be announced on Sunday evening.