In early trading on Monday, the euro plummeted to new multi-day lows against the currencies of US, Japan and Switzerland. On the other hand, the euro edged up against the British pound due to across the board weakening of the latter.
Euro zone economic sentiment declined further in March, but more slowly than in the first two months of 2009, a monthly survey carried out by European Commission showed today.
The economic sentiment index declined to 64.6 in March, while the consumer confidence and services confidence in March declined one point each to minus 34 and minus 25, respectively.
While industrial confidence slid 2 points to minus 38, confidence in construction remained at minus 32. The business climate indicator for the Euro area fell to minus 3.58.
The euro, which closed last week's trading at 130.12 against the yen fell to a 2-week low of 126.43 in early deals on Monday. If the euro-yen pair moves down further, it may test support around the 122.4 level.
The yen gained despite a disappointing economic report from Japan. Industrial output in Japan plummeted by 9.4% in February compared to the previous month, the Ministry of Economy, Trade and Industry said. That was slightly worse than forecasts that called for a decline of 9.0% following the 10.2% decline in January. On an annual basis, industrial output dropped 38.4% compared to forecasts of a 38.1% decline after the 31.0% retreat in the previous month.
During early deals on Monday, the euro slipped to a 12-day low of 1.3164 against the dollar and an 18-day low of 1.5131 against the Swiss franc. The next downside target level for the euro is seen at 1.307 against the dollar and 1.499 against the franc. The euro-dollar and the euro-franc pairs were worth 1.3295 and 1.5218, respectively at last week's close.
Against the pound, the euro strengthened to 0.9343 in early trading on Monday. This may be compared to Friday's close of 0.9285. The near term resistance level for the euro-pound pair is seen at 0.938.
The pound tumbled today after a report by the property industry group Hometrack showed that the average price for a home in England and Wales plummeted by a record 10.3 percent on year in March. March's annual fall was the biggest yet in Hometrack's monthly survey of estate agents and surveyors, which started in 2000 and has persistently reported lower price falls than official government data.
Adding to pound's slide, another report showed that Britain's financial services industry is cutting jobs at the fastest rate for 16 years as it cuts costs to soften the blow of a steep fall in profitability. The CBI/PWC financial services survey, covering the three months to early March, found 9 percent of companies reporting a rise in business volumes and 56 percent saying volumes fell, giving a net 47 percent of companies reporting a fall. That marked a sixth successive quarter of declines.
In addition, UK M4 money supply increased 1.4% month-on-month in February, unrevised from the preliminary estimate, after rising 2.4% in January, a final report from the Bank of England showed. On an annual basis, money supply rose 18.7%, revised down from an initial estimate of 18.8% growth. M4 sterling lending increased GBP 21.4 billion, larger than GBP 6.7 billion increase recorded in January.
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