The euro suffered fresh falls after a raft of weak data out of the region suggested that the economy is
faltering rapidly.Data showed that both the manufacturing
and services sectors in the area is shrinking, highlighting that a recession is
now a real possibility. The euro zone Purchasing Managers Index for services
slipped to a five year low of 48.3
in July from 49.1 in June. Euro zone manufacturing activity
also slumped, falling to 47.5 from 49.2 in June. Both figures were below
expectations.
At the same time, a key survey from Germany,
the Ifo index also came in weaker than
expected. The Ifo research institute said its July business climate index
fell to 97.5 from 101.2 in
June, dropping below analysts' forecasts of a decline to 100.0. The figure for
June was revised down from 101.3.
Separately, the pound also fell prey to weak data, this time on the state of UK retail sales
which suffered a massive slump in June. Retail sales in the UK plunged in June by their biggest
amount since records began in 1986 but inflationary pressures, particularly
within food, continue to mount, official figures showed today. The office for
National Statistics said retail sales in June dropped by 3.9%.
Later dollar came under pressure after U.S. home resales dropped to a 4.86
million annual rate in June, the lowest level in a decade, from a 4.99 million
pace the prior month.
EUR/USD printed high on $1.5712 before retreating to $1.5630. Later rate rebounded to $1.5680/90.
GBP/USD tested lows around $1.9810 before rate rose to $1.9870.
USD/JPY failed to break above Y108.00, spurring correction to Y107.30.
Today’s focus on US data, including
Durable goods orders, new home sales and Un Michigan consumer confidence index.
The Commerce Department will today report sales
of new houses dropped to an annual pace of 503,000 from 512,000 in May, a
separate survey of economists shows.