WSJ: Euro Faces Pressure Over Threat of ECB Easing Measures
Currency Slides on Poor Euro-Zone Manufacturing Data and German Inflation Figures
The euro slid Monday after disappointing manufacturing data for the currency bloc and sluggish German inflation figures piled more pressure on the European Central Bank to introduce further easing measures at its eagerly-awaited policy meeting later in the week.
The common currency weakened 0.3% against the dollar to trade at $1.3597, a whisker above last week's three-month low.
Investors are focusing on Thursday's ECB meeting, at which officials are widely expected to introduce new measures to head off below-target inflation.
Data on Monday that showed monthly consumer price declines in several German regions underlined the task facing the ECB. Euro-zone manufacturing data showed continued expansion of the sector, but at a slower pace than indicated by preliminary estimates.
"The risk of the ECB pursuing negative interest rates or expanding its balance sheet is set to keep the euro trading heavily into the Governing Council meeting," said Mansoor Mohi-uddin, a foreign-exchange strategist at UBS. UBSN.VX +0.56%
Meanwhile, European stock markets started the week in upbeat fashion, spurred by a pickup in China's manufacturing sector.
The Stoxx Europe 600 index was 0.2% higher mid morning, having touched a fresh 6½-year high in early trade.
The move reflected gains in Asian markets after China's manufacturing purchasing managers index for May climbed to 50.8, up from April's 50.4 and above the 50.6 median forecast. The data showed the fastest factory activity expansion in five months, helping to ease recent concerns about a sharp slowdown in the sector.
The Chinese figures helped spur broad gains for the dollar, which was 0.2% higher against the Japanese yen at ¥102.03.
The manufacturing data "provided further reassurance that the economic growth in China has at least started to stabilize in the near term," said Lee Hardman, a currency analyst at Bank of Tokyo-Mitsubishi UFJ.
In Europe, all major indexes were higher with manufacturing data for the euro zone and the U.K. due later Monday morning.
London's FTSE 100 and Germany's DAX both gained 0.2%. France's CAC-40 lagged, dropping 0.2%.
U.S. stocks were set for small gains, with futures indicating a 0.1% opening gain for the S&P 500. Changes in futures aren't necessarily reflected in market moves after the opening bell.
Mining stocks, which are highly sensitive to Chinese demand, were the best-performing sector, with the Stoxx Europe 600 basic resources subindex up 1.3%.
Mining giants Anglo American AAL.LN +1.37% and Glencore GLNCY -0.84% were among the top risers.
Elsewhere in corporate news, U.K. life insurance companies saw their shares decline after press reports over the weekend that further U.K. pension reform could be in the offing. The reported introduction of collective pension schemes will add uncertainty for investors in life insurance companies, according to analysts at Bank of America Merrill Lynch. Standard Life was the biggest faller on the Stoxx Europe 600.
BNP Paribas BNP.FR -0.37% shares remained under pressure after the WSJ reported late last week that the French bank could face a potential $10 billion fine over an alleged breach of U.S. sanctions.
