The euro showed mixed performance in early deals on Tuesday after data showed that the jobless rate in the euro area hit a record high in February and the final Markit purchasing managers' index for the region contracted at a faster pace in March.
While the euro edged higher against the pound and the yen, it halted Asian session's downtrend and held steady against the dollar and the Swiss franc. Meanwhile, the euro fell sharply against the resource-linked currencies.
Operating conditions across Eurozone manufacturing sector deteriorated further in March, detailed results of a survey by Markit Economics showed today, although the rate of decline in activity was less steeper than previously estimated.
The headline purchasing managers' index, that measures the performance of the manufacturing sector, fell to 46.8 in March from 47.9 in February. A PMI reading below 50 indicates contraction of the sector.
Germany's manufacturing activity contracted less than estimated in March. The Markit/BME Purchasing Managers' Index dropped to 49 in March, but above the flash estimate of 48.9. The index fell into the negative zone from 50.3 in February.
Eurozone's seasonally adjusted unemployment rate was unchanged at 12 percent in February, after the January figure was revised upwards, statistical office Eurostat said today. The latest figure matched economists' expectations, and was slightly higher than the originally reported 11.9 percent.
The euro bounced back to near the 120.0 level against the yen around 6:15 am ET from a 5-week low of 119.17 hit at the beginning of the session. Next barriers for the currency cross are visible at 120.80 on the upside and 118.80 on the downside.
The yen was down after the Bank of Japan Governor Haruhiko Kuroda reaffirmed his commitment to end deflation and attain 2 percent inflation in two years, cementing expectations for bold policy moves during his first Policy Board meeting as Governor later this week.
Speaking before a Parliamentary committee, Kuroda said it is not easy to reverse 15 years of deflation, but the central bank will use all possible options to attain the 2 percent inflation target. BoJ Policy Board meets on April 3-4 and economists forecast more monetary easing measures from the central bank under Kuroda's leadership.
At the same time, the Japanese Prime Minister Shinzo Abe suggested Tuesday that the Bank of Japan may fail to achieve its target of 2 percent inflation if the economy changes its course. "The economy has it own life. What will happen in the future is quite unpredictable," Abe told a Parliamentary committee.
The common currency climbed to a 5-day high of 0.8461 against the pound around 6:15 am ET, having appreciated almost 0.4 percent from previous session's low of 0.8428. If the euro-pound pair extends advance, 0.8480 is seen as the next likely resistance level in the near-term.
British manufacturing downturn continued in March, but the rate of contraction in activity was less severe than in the previous month, a survey by Markit Economics and Chartered Institute of Purchasing & Supply (CIPS) showed today.
The headline purchasing managers' index rose to 48.3 in March from February's four-month low of 47.9. Economists expected the reading to rise to 49.
The euro that fell to a 5-week low of 1.2138 against the Swiss franc and a session's low of 1.2826 against the US dollar at the beginning of Tuesday's European deals managed to hold steady around 1.2150 and 1.2840, respectively in succeeding trading hours.
Operating conditions across Swiss manufacturing sector deteriorated in March, a survey by procure.ch and Credit Suisse showed today. The purchasing managers' index, that measures the performance of the factory sector, fell to 48.3 in March from 50.8 in February and 52.5 in January. Readings below 50 indicate contraction in activity.
Meanwhile the euro edged sharply lower against the commodity dollars on Tuesday, falling to a fresh multi-month low of 1.5207 against the New Zealand dollar, 5-day lows of 1.2999 against the Canadian dollar and 1.2254 against the Australian dollar. Further downtrend could lead the common currency re-test support levels of 1.2220/25 against the aussie, 1.2970 against the loonie and 1.5120 against the kiwi.
The Reserve Bank of Australia retained the cash rate unchanged at 3 percent for a third consecutive time as downside risks to global economic outlook receded and domestic consumption showed signs of moderate recovery. The central bank, however, stuck to its view that the current inflation outlook provided room to ease policy further. The decision was in line with economists' forecast.
