EUR USD AT TWO WEEK LOW AFTER WEAK DATA
Data released this morning showed a weakening in European manufacturing, possibly indicating that the European Central Bank may be forced to cut interest rates.
Germany's Purchasing Managers' Index for manufacturing dropped 1.1 from the previous month while its PMI services dropped 1.7, well below the expected 0.1 increase. The euro-zone's collective PMI Manufacturing also fell by 0.3 while its Services increased 0.2. There is now speculation that the ECB will lower interest rates in order to promote growth. There is however skepticism that cutting the rates won't in fact lead to growth.
The euro has fallen 0.5% to its lowest level against the dollar in two weeks. The single currency also lost 0.3% versus the yen after a 0.2% decrease yesterday. Later today the euro-zone will be releasing more relevant data concerning the region's largest economy as we look forward to Germany's Ifo Business Climate. The index is expected to fall.
Meanwhile, the pound declined 0.3% to a two-week low against the dollar today after a report showing that the UK factory index decreased to its lowest level since October 2010.
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