Euro Extends its Losses for the Third Straight Week on Mixed Data

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Euro Extends its Losses for the Third Straight Week on Mixed DataThe euro declined for the third straight week after indexes of business confidence and manufacturing in the eurozone showed economic growth is not uniform, fuelling speculation that the European Central Bank will ease policy next month.

The euro was 0.5 percent lower at $1.3629 at the close of New York trade on Friday, in a session that saw it touch $1.3616, its lowest point since February 13. The 18-nation currency remained slightly unchanged at 138.97 yen. The dollar rose 0.5 percent to level at 101.97 yen.

“The driver here, and for most currencies, is monetary-policy expectations,” Eric Viloria, a New York-based strategist at Wells Fargo & Co., told Bloomberg. “The data we had this week, there were some mixed PMIs and the German Ifo was disappointing, and that just serves to reinforce these expectations that there could be monetary easing from the ECB.”

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The German Ifo Institute’s business confidence index declined in May. Another report by Markit Economics showed that its Purchasing Managers’ Index of services industry in the eurozone rose to the strongest level in nearly three years. An identical measure for factory activity declined. Markit Economics also reported that an index of factory activity in France fell to 49.3 in May from 51.2 the previous month, while a similar measure for services sector declined to 49.3 from 50.4.

The euro also took a hit from speculation that euro-skeptic politicians may gain an upper hand in the European Parliament’s elections.

The Australian dollar declined the most against the US dollar since the start of the year after the Reserve Bank of Australia indicated it may sustain the current all-time low interest rates. The Aussie plunged 1.4 percent to trade at 92.31 U.S. cents and hit 92.09 cents, its weakest level since May 2. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com