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Tue 16 Apr 2024 05:26GMT

Euro (EUR) Suffers as Eurozone Factories Suffer ‘Breath-Taking’ Collapse

Published: 5 May at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Australia, New Zealand, USA, China, Germany,

Pound (GBP)

The Pound (GBP) struggled today after the latest UK Services PMI for April fell to record lows of 13.4. As a result, this left many Sterling traders for the health of the British economy going forward.

Tim Moore, the Economics Director at IHS Markit, commented:

‘April's PMI data highlights that the downturn in the UK economy during the second quarter of 2020 will be far deeper and more widespread than anything seen in living memory.’
Meanwhile, the UK’s car sales plummeted to record lows not seen since the World War Two today.

However, we could see Sterling rise later on today if Downing Street announces plans to ease the nationwide lockdown.

Euro (EUR)

The Euro (EUR) continued to suffer today after Eurozone factories suffered a ‘breath-taking crash’, according to one analyst. Additionally, Sentix Eurozone Investor Sentiment plummeted to -41.8 in May, leaving many single currency traders nervous about the bloc’s economic health.

Today also saw the German European Central Bank (ECB) Governing Council Member, Jens Weidmann, warn that Germany – the Eurozone’s largest economy – had entered a severe economic recession.

US Dollar (USD)

The US Dollar (USD) held steady today after the US announced plans to borrow a further $3 trillion to boost Covid-19 spending.

Nancy Vanden Houten, an analyst at Oxford Economics, commented:

‘Borrowing needs are skyrocketing as the Treasury needs cash to fund stimulus measures and to compensate for a plunge in revenues caused by massive job losses.’

Meanwhile, the ‘Greenback’ has also benefited from its safe-haven status after US-China trade tensions flared up after US President Donald Trump threatened to place further tariffs on Chinese goods.

Australian Dollar

The Australian Dollar (AUD) performed well today after the Reserve Bank of Australia (RBA) held its interest rates at record lows of 0.25%.

RBA Governor Philip Lowe warned:

‘If the lifting of restrictions is delayed or the restrictions need to be re-imposed or household and business confidence remains low, the outcomes would be even more challenging than those in the baseline scenario.’

However, with US-China trade tensions and rising fears over Australian unemployment, we could see the Australian Dollar exchange rate fall over the next few days.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) was subdued today due to risk-off market trade.

Meanwhile, New Zealand Dollar investors will be awaiting today’s release of the NZ employment day. If these fall considerably below forecasts, however, we could see the ‘Kiwi’ fall as anxieties rise over the nation’s fragile economy.

As of Tuesday, 5th May 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1481, GBP USD exchange rate was 1.2446, GBP AUD exchange rate was 1.9324, GBP NZD exchange rate was 2.0527, and GBP CNY exchange rate was 8.7896.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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