Fundamental Comment

Euro drops after weak European manufacturing data

Euro drops after weak European manufacturing data

The levels of the euro declined during Monday trading, with the beginning of February, in light of the weak economic data issued by the euro zone, along with a significant recovery in the dollar levels, which increased negative pressure on the single European currency.

The euro against the dollar recorded its lowest level today at 1.2068 after it opened trading today at the level of 1.2129. On the other hand, the dollar index rose to its highest level in two weeks at the level of 90.91, and it had opened trading today at the level of 90.55.

Eurozone manufacturing PMI recorded growth in January of 54.8, better than expectations of 54.7, but the pace of growth has slowed since December, when it was 55.2.

With coronavirus cases on the rise again in Europe, countries have forced large sectors of the service industry and manufacturing industries to close their doors, which affected the performance of the manufacturing sector in January.

In Germany, the PMI recorded growth of 57.1 in January from the December reading of 58.3, while in France the sector rebounded by 51.6, better than the previous reading of 51.1. In Italy, there was also a rebound of 55.1 from the previous reading of 52.8.

On the other hand, unemployment rates in the euro area stabilized during the month of December at 8.3%, despite the continued closures due to the Corona pandemic in most of the eurozone countries.

To keep unemployment levels low during the pandemic, eurozone countries are using leave systems where governments subsidize a portion of wages to help employers keep employees on their payrolls. This prevents layoffs and means that productive capacity can recover more easily when the economy reopens.

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