Euro holds steady under threat of assault
Wednesday 02 June 1999
But analysts predicted it would come under renewed pressure once a key meeting of the European Central Bank today and this week's European summit were out of the way.
"We are approaching a crunch. There is a clear danger the markets will mount a serious assault on the euro," said Mark Cliffe, chief economist at ING Barings.
Many currency experts reckon the euro could dive below parity against the US dollar. It held steady at just above $1.04 yesterday.
The reason for the euro's prolonged weakness was highlighted by new figures showing sluggish growth in European industry in contrast to booming US manufacturing.
The purchasing managers' index of activity declined in the Euro-11 countries, from 50.7 to 50.4 in May, just above the dividing line between recession and expansion. Although French manufacturing rebounded strongly, activity in Germany and Italy continued to slow.
In stark contrast, the same survey for the US revealed a bounce from an already healthy 52.2 in April to 55.2, suggesting there has been no slowdown in the pace of growth in the economy. However, the survey showed the first increase in prices charged by manufacturers since December 1997.
The news hit bond and share prices in the US yesterday because of fears that the Federal Reserve will raise interest rates to slow the economy to a sustainable pace. Analysts will comb labour market figures due on Friday for signs of inflationary pressure from earnings.
The dip on Wall Street, where the Dow Jones index was 117 points lower at 10,442.7 late morning, sent the dollar lower in a knee-jerk reaction yesterday. But the prospect of higher US interest rates at a time when the European Central Bank cannot risk raising its interest rates will keep the euro under pressure.
Edgar Meister, a member of the Bundesbank Council, said yesterday that the weak euro might force the ECB to defend the currency with a rate increase.
But few analysts think the central bank could risk the damage this would inflict on the weak core economies of Europe.
- 1 Disney heiress Abigail disowns her share of family profits in West Bank company
- 2 The secret report that helps Israel hide facts
- 3 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 4 Israel's propaganda machine is finally starting to misfire
- 5 HSBC closes bank accounts belonging to Muslim clients in the UK
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK
Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
Disney heiress Abigail disowns her share of family profits in West Bank company
'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
HSBC closes bank accounts belonging to Muslim clients in the UK
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...