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Forex News: Euro Falls After French Private Sector Activity Contracts

Euro Falls After French Private Sector Activity Contracts To Over 4-yr Low

01/24/2019 - 05:40:00 (RTTNews)

(RTTNews) - The euro declined against its key counterparts in the early European session on Thursday, as a data showed that French business activity contracted at the fastest pace in more than four years in January.

Data from IHS Markit showed that the flash Composite Purchasing Managers' Index fell to a 50-month low of 47.9 from 48.7 in December. Economists had forecast a score of 51.

A PMI reading below 50 suggests contraction in activity.

The flash services PMI tumbled to a 59-month low of 47.5 from 49.0 in December. Economists were looking for a score of 50.5.

Nonetheless, the flash manufacturing PMI rose to a 3-month high of 51.2 from 49.7 in the previous month. Economists had expected a reading of 50.

Separate data showed that Eurozone private sector expanded at the weakest pace in five-and-a-half years at the start of the year, led by weaker pace of growth in both manufacturing and services, defying expectations for further improvement.

The flash Composite Purchasing Managers' Index, or PMI, dropped to a 66-month low of 50.7 from 51.1 in December. Economists had forecast a score of 51.4.

Investors await the European Central Bank's monetary policy decision, due at 7:45 am ET. Economists expect the key rates to remain unchanged.

The main refi rate is at a record low of zero percent. The marginal lending facility and the deposit facility are at 0.00 percent, 0.25 percent and -0.40 percent, respectively.

ECB chief Mario Draghi's post-meeting press conference is likely to garner attention for any changes to forward guidance or any new measures amid slowing momentum in the economy.

The currency held steady against its major rivals in the Asian session, with the exception of the yen.

The euro dropped to 0.8688 against the pound, a level not seen since November 14, 2018. If the euro extends fall, 0.85 is likely seen as its next support level.

Having advanced to 1.1391 against the greenback at 8:30 pm ET, the euro dropped to a 2-day low of 1.1340. The next possible support for the euro is seen around the 1.11 area.

Reversing from an early high of 124.90 against the yen, the euro weakened to 124.40. On the downside, 122.00 is possibly seen as the next support level for the euro.

The euro slipped to an 8-day low of 1.1275 against the Swiss franc, after rising to 1.1327 at 8:00 pm ET. The euro is seen finding support around the 1.10 level.

The euro edged down to 1.5143 against the loonie and 1.6725 against the kiwi, off its early highs of 1.5204 and 1.6811, respectively. The euro is poised to target support around 1.50 against the loonie and 1.66 against the kiwi.

The euro retreated to 1.5984 against the aussie, from an early 2-week high of 1.6038. This may be compared to a 2-day low of 1.5891 touched at 8:00 pm ET. Next key support for the euro is likely seen around the 1.59 mark.

Looking ahead, at 7:45 am ET, the European Central Bank announces its decision on interest rates. Economists expect the main refi rate to be kept at a record low of zero percent and the deposit rate at -0.40 percent.

In the New York session, U.S. weekly jobless claims for the week ended January 19, leading index for December and Markit's flash services PMI for January are scheduled for release.

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