Last updated: September 1, 2011 11:26 pm

Growth concerns weigh on euro

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

The euro came under pressure on Thursday as weak eurozone manufacturing data raised speculation that the European Central Bank would abandon its hawkish monetary policy stance.

August eurozone manufacturing purchasing managers’ indices suggested that activity was deteriorating across the region.

The figures indicated that not only were countries on the periphery of the region continuing to struggle, but that countries at the bloc’s core were experiencing a sharp slowdown in activity, with German manufacturing growing at its slowest pace in nearly two years.

Howard Archer at IHS Global Insight said the contraction in eurozone manufacturing activity in August, coupled with moderating price pressures, reinforced the belief that the ECB would hold off from raising interest rates again for some considerable time to come.

“The latest data and surveys suggest that the ECB’s eventual next move could actually be to trim interest rates,” he said.

The euro was also undermined as sluggish demand at a Spanish government bond auction stoked concerns over the eurozone fiscal crisis.

By late day in New York, the euro fell 0.7 per cent to $1.4265 against the dollar, which found support as the Institute for Supply Management's survey of US manufacturing activity came in stronger than expected.

The euro also lost 0.7 per cent to Y109.58 against the yen and was 0.4 per cent weaker at £0.8818 against the pound.

The euro fell more sharply against the Swiss franc as investors sought a haven from the eurozone’s fiscal and economic problems.

Demand for the Swiss franc was encouraged as fears receded that the Swiss National Bank would intervene in the market to stem strength in its currency.

The Swiss franc rose 2.3 per cent to SFr1.1333 against the euro and climbed 1.5 per cent to SFr0.7941 against the dollar.

Meanwhile, the dollar rose 0.4 per cent to $1.6182 against the pound and climbed 0.2 per cent to Y76.79 against the yen.

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE