Market Review – 05/09/2011 21:58 GMT
Euro falls broadly as debt concerns mount
Increasing worries about the Christian Democratic union’s most beleaguered states sent the euro lower against the dollar on Monday for the fifth day straight to its lowest level since August 5.
The single currency opened lower Monday from Friday’s New York close of 1.4203 due to a series of euro-negative news over the weekend and price was under heavy pressure throughout the day, touching a session lows of 1.4061, 108.15 and 1.1019 versus the US dollar, Japanese yen and Swiss franc respectively in European afternoon before staging a recovery on short-covering.
An electoral loss for German Chancellor Angela Merkel’s CDU in her home state of Mecklenburg-Vorpommern on Sunday added concerns that support for the bailout package from the EU’s biggest member state is waning. Talks between Greece and organizations offering financial support broke down while Italy has been unable to meet its budgetary commitments.
European stock markets tumbled Monday on risk aversion, with the FTSE-100, Euro Stoxx 50, and DAX down by 5.11% to 2107, 3.58% to 5102, and 5.28% to 5246 respectively.
The British pound fell in tandem with euro on Monday, cable quickly penetrated Friday’s low at 1.6172 to 1.6135 in Australian morning before staging a minor rebound, renewed selling at European open sent the pound to its session low of 1.6061 near European closing.
Earlier on Monday, UK Lloyds employment confidence survey for August fell by the most in more than 10 years to -66 and UK Services PMI for August came in at 51.1 against 55.4 in previous month but was still in expansionary levels.
On the data front, German Services PMI for August was better than expected at 51.1 versus forecast of 50.4, and eurozone Services PMI for August was as expected at 51.5, whilst eurozone retail sales in August came in at 0.2% m/m and -0.2% y/y against consensus median forecast of -0.1% and -1.0% respectively.
Data to be released on Tuesday includes:
U.K. BRC retail sales, Australia RBA rate decision and current account, Swiss CPI, EU GDP, Germany factory orders, and U.S. ISM non-manufacturing.