INV: Euro shrugs off data, slips lower on Greece worries
Investing.com - The euro slipped lower on Wednesday, shrugging off upbeat private sector and retail sales data, as fresh concerns over the Greek governments plans to renegotiate its bailout weighed.
EUR/USD was down 0.35% to 1.1438, retreating from Tuesday’s highs of 1.1533.
Sentiment on the single currency was hit by fresh concerns over Greece, following reports that the European Central Bank is unwilling to back government plans to renegotiate the terms of the country’s €140 billion bailout.
The single currency had rallied in the previous session after Athens proposed debt swaps to ease the country’s burden debt, under which creditors would swap outstanding debt for new growth-linked bonds. This could help to reduce the risk of losses on privately held bonds.
The euro’s losses were held in check after data on Wednesday showed that the euro zone private sector expanded at the fastest pace in six month in January, as economic activity accelerated.
The euro zone composite purchasing managers’ index, which measures activity in the region’s manufacturing and services sectors rose to 52.6 up from a preliminary estimate of 52.2 and a final reading of 51.4 in December.
Output growth expanded in Germany, Italy and Spain, but the downturn in the French economy extended into its ninth month.
A separate report showed that euro zone retail sales rose 2.8% in December from a year earlier, the strongest increase in nearly eight years.
EUR/JPY was down 0.40% to 134.39, while EUR/GBP slid 0.47% to 0.7534.
Sterling was boosted after data showing U.K. service sector output grew at a faster than expected rate in January after slowing at the end of last year.
The services PMI rose to 57.2 last month, recovering from a 17-month low of 55.8 in December and well ahead of forecasts of 56.3.
However the report also showed that inflation pressures remained subdued, underlining expectations that the Bank of England will leave interest rates on hold until early 2016.
In other trade, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 94.03, recovering from the previous sessions lows of 93.39.
The index fell 0.9% on Tuesday, the largest one day decline since October 2013, pressured lower by the firmer euro and strong gains in commodity currencies.
