RTTN:Euro In Lower-ranges Despite Eurozone Exit From Recession
The euro drifted weaker against the pound and was trading in lower-ranges against the rest of majors in early deals on Wednesday even after a report confirmed of eurozone's exit from recession.
Upbeat GDP and PMI data were eclipsed by key risk-factors including central bank decisions and a fall in European equities.
Investors keep an eye on the developments in Syria ahead of policy decisions from major central banks, including the Bank of Canada today, the Bank of Japan, the European Central Bank and the Bank of England due tomorrow and the U.S. nonfarm payrolls data on Friday.
The euro area economy exited its longest recession on record as initially estimated during the quarter ended June, second estimate from Eurostat showed today.
Gross domestic product expanded 0.3 percent quarter-on-quarter, in line with flash estimate. The contraction for the first quarter was revised down to 0.2 percent from 0.3 percent. On a yearly basis, GDP dropped 0.5 percent, instead of the 0.7 percent fall estimated on August 14.
At the same time, the Eurozone private sector expanded at the fastest pace in just over two years, but the rate of growth was slightly weaker than initially estimated in August, final survey data from Markit Economics showed today.
The composite output index rose to 51.5 in August from 50.5 in July. The final reading was slightly below the flash estimate of 51.7. The services Purchasing Managers' Index increased to 50.7 from 49.8 in July. The earlier flash estimate for August was 51.0.
Of the big-four eurozone economies, Germany registered the strongest performance during August. In contrast, France registered a faster drop in overall output than in July. At the same time, Italy and Spain both moved out of contraction territory in August.
Meanwhile, retail sales in the Eurozone increased less than expected in July, the latest data from Eurostat revealed today. Sales rose 0.1 percent in July from a month earlier compared with forecast for a 0.2 percent growth. This followed a 0.7 percent decline in June.
Year-on-year, retail sales declined 1.3 percent in July. This was faster than a 1.1 percent fall reported in June and a 0.3 percent drop expected by economists.
The pound rallied after a report showed that the British services sector expanded in August at the fastest pace in more than six-and-half years, helped by a surge in new business.
Data from a survey by Markit Economics and BME showed today, the seasonally adjusted purchasing managers' index for the service sector advanced to 60.5 in August from 60.2 in July. Economists had forecast the index to decline to 59.7.
Meanwhile, China's service sector business activity increased at the fastest pace in five months in August, a survey by HSBC and Markit Economics revealed, adding to signs that the world's second-largest economy is stabilizing.
The common currency dropped to 0.8437 against the pound around 5:15 am ET, its weakest level since May 15 and the currency cross is thus approaching the key 0.84 support level. The euro has been trading in negative terrain for the past one week since its corrective rally above 0.8650 stalled on August 28.
The euro traded at 1.3175 against the US dollar around 5:50 am ET, in the upper position of a narrow range between 1.3157 and 1.3180. If the euro-buck pair extends downtrend, the next likely support is seen around the 1.3140 level and in the event of a reversal, the 1.32 resistance area will be re-tested.
The single currency also moved in narrow ranges against the yen, trading between 131.05 and 131.30. Against the Swiss franc, the European shared unit traded in relatively low ranges of 1.2330/45, after registering an 8-day high of 1.2350 in the morning.
Looking ahead, the U.S. trade balance for July and the U.S. Federal Reserve's Beige book will garner market attention in the North American session.
