Euro Area Shows Further Slump as Manufacturing Data Proves Disappointing

Euro Forecast: EUR Unchanged Against its Major Counterparts

The Eurozone’s manufacturing data for December was released just yesterday, the figures were disappointing however. Economists noted that the euro areas manufacturing sector was already on a downturned which deepened after the news unfolded. This was unwelcomed news as the euro was set to gain after positive news erupting from the US-China trade deal as well as renewed monetary stimulus.

Poor Manufacturing Data Hinder Euro Gains

Yesterdays manufacturing data was not what the Eurozone were hoping for. The factory activity weakened to 46.3 which is down from the previous month of November’s 46.9. Added to this, orders fell in December, with job losses seeing the sharpest rise since the start of 2013. Germany was the worst-performing country which is worrying for the Eurozone as its largest economy resides in Germany. December also marks the 11th consecutive month in which the level has been sub-50, which has sent alarm bells ringing for contraction in the sector. The news did not lend the euro any favours as it weakened, trading 0.1% at $1.1202 yesterday morning on the interbank exchange.

Euro Could Benefit From Trade Deal and Renewed Monetary Stimulus, but May Not Be Enough to Offset Economic Data

With the news of the economic data for the Eurozone, investors will be disappointed as the euro was poised to lift based on recent news from the US-China trade deal. US President Donald Trump announced that the US and China had agreed an official signing date for the ‘phase one’ deal which sent confidence of global economic growth soaring. The announcement signalled an easing in international trade tensions. The euro is also set to benefit from the European Central Bank’s (ECB) monetary stimulus, but investors are concerned that the poor-performing economic data may be negative enough to negate the effects of this.

The manufacturing data was not all negative however, as reports showed that French figures were up for the month, with the figures showing 50.4 rather than 50.3. the data beat projections but were in no way positive and did not boost the euro. For the euro, the French and German inflation projections for December will be released later today. These are likely to be the most influential of the data releases set to be revealed in the upcoming days. Investors in the euro will be hoping for a turn of luck, softening the ECB speculation and boosting the euro.

For more information on euro exchange rates and for assistance in making transfers, then please contact me, James Lovick, at jll@currencies.co.uk.