Euro Below $1.25 As Economic Data Disappoints
The euro was steady below $1.25 after PMI data out on Monday put even more pressure on the European Central Bank to step in and stimulate the region’s economy further.
The common currency traded at $1.2484 at 7:00 GMT as investors wondered how the bank would respond to the lackluster figures at this week’s policy meeting.
The eurozone’s manufacturing PMI reading was 50.6 in October, modestly higher than September’s 50.3, but below expectations of 50.7.
The figure came in above the 50 point mark that separates expansion and contraction, but remained worryingly low and suggested that manufacturing activity would do little to boost economic activity in the fourth quarter.
The Wall Street Journal reported that many analysts are concerned about the manufacturing PMI figures as the modest rise was fueled mostly by businesses cutting prices rather than growing demand.
New orders fell for the second straight month, suggesting that the manufacturing sector is likely to continue struggling through the end of the year.
Germany’s manufacturing activity improved slightly from September to October with the figure climbing above the 50-point mark that indicates contraction to 51.4.
Weakness was especially prevalent in several struggling southern economies like Italy and Greece, while the bloc’s second largest economy, France, also posted a decline.
While the PMI data was concerning, it is unlikely to push the ECB into acting in November.
Most are expecting the bank to hold off on any further stimulus for the time being in order to evaluate the effects of interest rate cuts and new bond purchases that would implemented over the past few months.
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