By TraderVox.com
Tradervox (Dublin) – The eurozone PMI readings came worse than the market’s expectation raising the demand for safe haven currencies. The Pan-European flash manufacturing and services PMI have unexpectedly gone downward. The manufacturing PMI came at 46.0 in April from 48.1 while the services PMI came down to 47.9 in April from 49.4 registered previously.
The readings indicate a contraction in the region’s economy and have caused a selloff of the euro. The EUR/USD pair has accelerated to the downside as traders seek safe haven currencies. Another hit has also come from the Italian consumer confidence indicator which came in lower than expected. The reading came in at 89.0 against an expectation of 96.2.
The pair lost 0.45 percent to trade at 1.3142 with the next support expected at a 10 day moving average of 1.3136 which is just above an April 20 low of 1.3129. The pair might accelerate downwards to 1.3058 an April 18 low and then to April 16 low of 1.2995.
Chris Williamson, a Chief Economist at Markit said that the preliminary PMI indicate a higher rate of economic contraction in the 17 nation trading bloc. He added that the data seems to extend a double-dip recession for the third quarter respectively. These sentiments are supported by the report as it showed deterioration across the region. In France, the uncertain presidential elections have resulted to a worrying downturn of the economy while Germany’s growth was near stagnation in the first quarter of the year. Analysts have also noted that the rate of decline have gained momentum in the periphery raising concerns about the effectiveness of the deficit fighting measures.
Concerns about the euro zone crisis was discussed in the IMF G-20 meeting where the IMF was able to secure more than $430 billion to increase its firewall. The IMF intends to safeguard global economy from the threat of the EU crisis. EU leaders have insisted that they have done what is possible and more effort and help is needed internationally.
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