Market Overview

ECB Under More Pressure As PMI Slips

ECB Under More Pressure As PMI Slips
Greece Backs Out Of The Spotlight While Anti-Euro Sentiment Remains
When It Comes To Oil, Markets Are Asking, 'Are We There Yet?'
Related EWI
Greece Bailout Talks Grind To A Halt, Markets Reconsider Possible 'Grexit'
Global Markets Worry That Wednesday's Meeting Will Leave Greece Without Funding

The euro remained below $1.32 on Tuesday morning as the European Central Bank’s September policy meeting approached.

The common currency traded at $1.3127 at 6:00 GMT following poor economic data and news that the situation in Ukraine was worsening.

Data from Germany out on Monday confirmed that the block’s largest economy contracted in the second quarter, a worrisome sign for the region’s recovery. After posting 0.7 percent growth in the first quarter, German GDP fell to 0.2 percent annually in the second quarter.

The nation’s economic indicators have painted a gloomy picture recently, suggesting that the country’s once dependable growth is slowly tapering off.

The decline in Germany is partly because of ongoing conflicts around the world, which has been affecting the nation’s trade. Most notable is the growing tension between the West and Russia over the worsening situation in Ukraine.

Related Link: Barron's Recap - Work Is For Squares

Reuters reported that Ukrainian President Petro Poroshenko has threatened a “full-scale war” if Russia continues to send troops and weapons across the border. Kiev claims that Russian convoys including armored vehicles, weapons and soldiers are being sent across the border in support of pro-Moscow separatists who have taken control of the eastern part of Ukraine.

Following Kiev’s allegations, the U.S. and Europe began to prepare new economic sanctions against Russia in support of Ukraine.

However, if a new round of sanctions is introduced it will likely have a negative effect on the already fragile eurozone economy. Since Russia is one of the bloc’s largest trading partners, limited transactions between the two could have as much negative impact on the eurozone as it does on Moscow.

The growing risk in Ukraine is likely to put more pressure on the ECB to ease further, but most analysts are betting that the bank will hold off for now. In June the bank revealed a new package of easing measures, some of which won’t take effect until September.

Because of that, the bank will probably hold off until the effects of June’s easing can be measured.

Posted-In: European Central BankNews Eurozone Forex Global Federal Reserve Pre-Market Outlook Markets Best of Benzinga


Related Articles (EWI + BROAD)

Around the Web, We're Loving...

Get Benzinga's Newsletters

Our Experts vs. S&P 500Powered by Benzinga
Marketfy Products Return S&P 500
Morning Profit Maker 42.72% 6.69%
The Option Prophet 91.14% 6.69%
SecretCaps 26.55% 6.69%
Short-Term Trend Trading 11.89% 6.69%
View the highest rated products→