By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — The euro regained its footing Thursday, but only after dropping to its lowest level versus the dollar since July 2010 after economic surveys pointed to a deepening downturn across the euro zone.
The euro EURUSD -0.05% traded as low as $1.2514 versus the dollar before trimming losses to rebound to the $1.2575 level, little changed from its level in North American trade late Wednesday.
“On this occasion, the catalyst [for the fall] was economics rather than politics, as a batch of euro-zone activity indicators surprised comprehensively to the downside,” said Adam Cole, head of G-10 forex strategy at RBC Capital Markets.
A preliminary euro-zone purchasing managers’ index for May indicated private-sector activity across the region shrank at its fastest pace since mid-2009, driven by a sharp slowdown in manufacturing activity. Meanwhile, the closely-watched Ifo German business climate index dropped more than expected to a six-month low. Euro-zone PMI
The euro managed to trim losses, however, as overall risk sentiment appeared to rebound. Strategists said a bounce back after weeks of heavy selling pressure may be overdue.The euro remains down nearly 5% versus the dollar since the beginning of May.
The dollar index DXY +0.10% , which measures the U.S. unit against a basket of six major currencies, traded at 82.060, down slightly from 82.073 late Wednesday.
The British pound GBPUSD -0.05% changed hands at$1.5678, down from $1.5698 on Thursday.
The Office for National Statistics revised down its estimate of first-quarter gross domestic product to show a 0.3% contraction versus the final three months of 2011. The agency had initially estimated a 0.2% GDP fall. British GDP revised down
The dollar changed hands at 79.37 Japanese yen USDJPY -0.16% , down from ÂĄ79.49.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
