There is growing concern that the Eurozone economy is slowing following recent data releases. Data this week relating to German IFO business index which measures sentiment fell to a 14 month low in August and showed its biggest monthly decline against the previous month not seen since the height of the credit crunch of November 2008.
Further data released which illustrates anticipated German GDP growth also slumped below its long term average. The general belief is that it is clear the German economy is slowing but there is some way still to go before slipping into recession, the slowdown is being attributed to contraction in the US following the start of this month’s news relating to the handling of the US debt situation and not helped by the eurozone debt problems.
Additional data releases from Belgium relating to business confidence were on the same tone as the German announcements showing a drop to a 20 month low in August, lastly industrial orders in the eurozone in June dropped 0.7% illustrating a slow down in growth in the eurozone industrial sector is taking place.
Ongoing concern of the likely success of the Greek bailout deal added to concern over the Euro also some support for the dollar was visible due to improved risk appetite following reports that Berkshire Hathaway is looking to invest $5 billion in Bank of America.
Sterling Euro opened at 1.1358 in the early morning session and dropped throughout the day as Sterling somehow had a worse day than the Euro losing 0. 52% on the day with a close at 1.1330.
Euro US Dollar is leaning towards an uptrend but range bound over the last week between 1.4350 and 1.45 with yesterday as no exception despite some choppy trading. The market opened in the low 1.44’s before climbing to 1.4480 in the morning session, this was followed by a drop back to 1.4330 briefly in afternoon trading following some positive US jobless data.
Euro Swiss is very much range bound between 1.12 and 1.15 and has been since 13th August when the market volatility from earlier in the month began to calm.