Euro sees drop to under $1.10 after economic concerns

Chris Lee

The single European currency dropped below a key level on Monday and into Tuesday after concerns about the real state of the Eurozone’s economy was revealed.

The currency was recorded at just below $1.10 at one stage in its pair with the US dollar, following suggestions that sentiment in the bloc is at a particular low.

The purchasing managers’ index was the killer for the euro’s value: it was recorded at 50.4 for September across the Eurozone.

This was lower than the predicted amount of 51.9, which was also where it was previously recorded.

Specifically, the currency was recorded at $1.09984 at one stage – which was close to its lowest point for the whole month, recorded three weeks ago.

This may not even be the worst the currency will see.

There were suggestions this morning that a key IFO data release from Germany today could be what is preventing currency traders from selling off their euros.

If this release is negative, there may well be further problems on the horizon for the currency.

The problems seemed to continue despite promises from the European Central Bank that stimulus packages would be brought out for as long as was required.

Elsewhere around the world, the pound sterling was recorded at $1.2429 in is pair with the US dollar.

This was largely due to political and even judicial uncertainty in the country.

The country’s Supreme Court is set to decide on Tuesday whether or not Boris Johnson’s decision to prorogue the country’s parliament was lawful.

If the court decides that the decision of Johnson was not lawful, it could have far-reaching implications for the ongoing Brexit process.

The US dollar was also up, this time hitting 107.59 in its pair with the Japanese yen.

The overall dollar index, a tool which is used by traders to track how the currency is performing in comparison with more than five others from across the globe, was up too – and was seen at 98.664 at one stage.

Perhaps some of the most illuminating developments on Monday and into Tuesday, however, focused on Asia.

A number of negative data releases were seen from major Asian economies, such as a Japanese manufacturing release which showed that the sector there was contracting at its fastest rate in seven months over the course of September.

Even emerging markets were not immune.

Production levels in Thailand, for example, went down by a rate much faster than expected.

There was little update on the planned high level trade talks between the US and China, however.

This issue has formed the bulk of the headlines in the forex markets news in recent weeks.

There was some indication on the nature of the talks.

Steven Mnuchin, who serves as the US treasury secretary, told interviewers that they would take place in a fortnight’s time.

He also indicated which personnel would be involved in these talks.

Chinese Vice Premier Liu He is expected to be involved, while Mnuchin himself will attend alongside Robert Lighthizer, the US trade representative.

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