News Column

Euro Slides As Eurozone Service Sector Expands Slowly

August 5, 2014

CANBERA (Alliance News) - The euro lost ground against most major currencies in European deals on Tuesday, as data showed that Eurozone service sector activity expanded less than initially estimated in July, signaling that region's recovery remains fragile.

The final data from Markit Economics showed Eurozone services PMI rose to 54.2 in July, below the flash reading of 54.4. The index was at 52.8 in June.

The final composite output index rose to 53.8 in July, from 52.8 in June, but a shade lower than the earlier flash estimate of 54.

The French private sector continued to shrink in July, separate data showed. As initially estimated, the composite PMI came in at 49.4, up from 48.1 in June. The services PMI rose to 50.4, in line with flash estimate, from 48.2 in June.

Italy's service sector also expanded slowly in July, with headline business activity index rising to 52.8. It was down from June's 43-month high of 53.9.

The euro hit a 4-day low of 0.7937 against the Sterling, after having advanced to 0.7964 in early deals. If the euro extends slide, 0.79 is seen as its next possible downside target level.

Growth of the UK service sector strengthened in July to an eight-month high, survey data from Markit Economics showed.

The headline Chartered Institute of Purchasing & Supply/Markit Purchasing Managers' Index rose to 59.1 in July from 57.7 in June.

The euro reversed from its prior high of 137.71 against the yen, dropping to a 6-day low of 137.37. On the downside, 136.00 is seen as next possible downside target for the euro.

A survey by Markit Economics showed that Japan's services sector expanded to 50.4 in July. That's up from 49.0 in June.

The single currency eased to a 4-day low of 1.4631 against the loonie, off an early high of 1.4656. Continuation of downtrend may take the euro to a support around the 1.45 mark.

The European unit declined to a 5-day low of 1.4350 against the aussie and an 8-day low of 1.5706 against the kiwi, after rising to 1.4401 and 1.5763, respectively earlier. The euro may test support around 1.425 against the aussie and 1.56 against the kiwi.

Looking ahead, the US ISM non-manufacturing composite index for July and US factory orders for June are to be released in the New York session.

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Source: Alliance News

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