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Euro Declines As European Factory Data Shrinks

Euro Declines As European Factory Data Shrinks

The euro lost ground against most major currencies in European deals on Friday as PMI reports out of Europe signaled that the euro area manufacturing activity still remained in contraction.

Activity in Eurozone's manufacturing sector decreased for the fifteenth consecutive month in October, though at a marginally slower rate than estimated earlier, as domestic market conditions remained subdued and trade flows deteriorated further, final data released by Markit Economics showed today.

The seasonally adjusted purchasing managers' index (PMI) decreased to 45.4 in October from 46.1 in September. The latest reading was slightly higher than 45.3 seen in the preliminary estimates. A PMI reading below 50 indicates contraction, while one above suggests growth.

Italy's manufacturing sector contracted for the fifteenth consecutive month in October.

The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector dropped to 45.5 in October from 45.7 in September, in line with economists' expectations.

Germany's manufacturing sector contraction in October was less severe than expected earlier, but activity dropped for the eighth consecutive month.

The Markit/BME Germany Purchasing Managers' Index fell to 46 from 47.4 in September, well below the long-term average of 52.

In Spain, manufacturing sector contracted at the fastest rate in three months in October. The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector dropped to 43.5 in October from 44.5 in September.

The euro was also under pressure as a Greek court yesterday ruled that the pension reforms demanded by international creditors were against the Constitution.

Against the pound, the euro declined to 0.7999, its lowest level since October 3. This is down 0.32 percent from yesterday's closing value of 0.8025. The next support level for the euro-pound pair is seen at 0.795.

The British construction sector expanded modestly in October, contrary to economists' expectations for a decline, data released by Markit Economics showed today.

The seasonally adjusted purchasing managers' index (PMI) for the construction sector increased to 50.9 in October from 49.5 in September.

The European currency continued its decline against the greenback, hitting more than a 3-week low of 1.2867. If the euro falls further, it may break 1.28 level. The pair was quoted at 1.2944 at yesterday's close.

Online job posting activity in the U.S. rose at a steady pace in October, data from Monster Worldwide Inc. showed today.

The Monster employment index grew 3 percent year-on-year to 156 in October, maintaining the growth pace recorded in September. The index was at 153 in September.

The euro reached a 2-day low of 103.26 against the yen with 103.00 seen as the next downside target level. At Thursday's close, the pair was worth 103.73.

The euro hit a 9-day low of 1.2838 against the Canadian dollar, more than 4-week lows of 1.5580 against the kiwi and 1.2408 against the aussie. On the downside, the euro is likely to break 1.28 against the loonie, 1.55 against the kiwi and 1.235 against the aussie.

Producer prices in Australia were up 0.6 percent in the third quarter of 2012 compare to the previous three months, the Australian Bureau of Statistics said today.

That was below forecasts for an increase of 1.0 percent following the 0.5 percent gain in the second quarter.

The U.S. jobs data for October, factory orders data for September and Canada's job report for October are due in the North American session.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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