September 23, 2021

European Currencies Fight the Current Despite Bad Economic Data

 The start of European session trading saw the publication of the dismal IHS Markit manufacturing and services PMI data from the European Zone and the UK in September.

Business activity in the European Zone grew at its weakest rate in five months in September as restrictions to curb coronavirus transmission have hurt demand.

Although daily infection figures have shown a significant decline throughout the month, most restrictions have yet to be fully lifted including in Germany and France due to concerns delta variants will spread.

Meanwhile, the manufacturing sector also showed a decline last month as it was affected by global chain disruptions that caused input prices to soar to a two -decade high.

However, the euro did not appear to be affected by this weak data reading, instead rising higher as it capitalized on the depreciation of the US dollar following a rebounding risk sentiment as the Evergrande issue began to be resolved.

Moreover, in the UK, both the manufacturing and services sectors also lost momentum this month, with business activity declining to its lowest level since February.

UK manufacturing activity also recorded slower growth with also falling to its lowest level since February due to material shortages and declining demand.

The pound also ignored this weak data reading by continuing to trade positive following the decline recorded by the greenback dollar.