Euro Declines As Eurozone Factory Activity Slumps, Coronavirus Fears Mount
April 01 2020 - 1:54AM
RTTF2
The euro lost ground against its major counterparts in the
European session on Wednesday, as the death toll from Covid-19
surged in the U.S. and data showed that Eurozone manufacturing
activity contracted at the fastest pace in more than seven years in
March amid virus outbreak.
Final data from IHS Markit showed that the final factory
Purchasing Managers' Index fell to 44.5 from 49.2 in February. The
reading was also below the flash estimate of 44.8.
The score has remained below 50.0 for fourteen consecutive
months and reached its lowest level in 92 months.
Sentiment deteriorated as reports of rising numbers of
coronavirus cases deepened the gloom over the likely impact on the
world economy.
The U.S. recorded a big daily jump of 26,000 new cases, bringing
the total to more than 189,000. The death toll there leaped to over
4,000, with officials predicting the disease could kill between
100,000 and 240,000 Americans.
Data from Eurostat showed that Euro area jobless rate
unexpectedly eased to its lowest level since in over a decade in
February, just ahead of the announcement of coronavirus pandemic
containment measures in several countries in the region.
The jobless rate fell to 7.3 percent, while economists had
expected it to remain unchanged at January's 7.4 percent. That was
the lowest rate since March 2008, the agency added.
Data from Destatis showed that German retail sales growth
accelerated unexpectedly in February as consumers stockpile
essentials ahead of containment measures taken by the government to
curb the spread of the coronavirus.
Retail turnover advanced 1.2 percent month-on-month in February,
following January's 1 percent increase. Economists had forecast the
sales growth to ease to 0.1 percent.
The euro fell to a 2-day low of 1.0560 against the franc and a
6-day low of 1.0917 against the greenback, after rising to 1.0605
and 1.1039, respectively in early deals. Should the euro falls
further, it is likely to test support around 1.03 against the franc
and 1.08 against the greenback.
The single currency hit near a 2-week low of 117.47 against the
yen, pulling away from a high of 118.87 set at 12:00 am ET. Next
key support for the euro is likely seen around the 114.00
level.
The latest survey from Jibun Bank showed that the manufacturing
sector in Japan continued to contract in March, and at a faster
rate, with a manufacturing PMI score of 44.8.
That's down from 47.8 in February and it slips further beneath
the boom-or-bust line of 50 that separates expansion from
contraction.
The euro edged down to 0.8838 against the pound, after climbing
to 0.8911 at 2:45 am ET. The euro is likely to challenge support
around the 0.86 mark.
Final survey data from IHS Markit showed that the UK
manufacturing activity contracted in March due to the outbreak of
coronavirus, or covid-19 and subsequent mitigation efforts.
The Chartered Institute of Procurement & Supply factory
Purchasing Managers' Index fell to 47.8 in March from 51.7 in
February. The flash estimate was 48.0.
The European currency reversed from an early high of 1.5610
against the loonie, 2-day high of 1.8124 against the aussie and a
6-day high 1.8633 against the kiwi, easing back to 1.5520, 1.7982
and 1.8475, respectively. The euro is seen facing support around
1.51 against the loonie, 1.61 against the aussie and 1.72 against
the kiwi.
Looking ahead, U.S. ADP private payrolls data for March is
scheduled for release at 8:15 am ET.
In the New York session, U.S. ISM manufacturing PMI for March
and construction spending for February are set for release.
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