Euro’s Glide‑Back: A Quick Turnaround in Gains
The euro’s not just chilling on the sidelines; it’s edging back toward a tidy profit. By about 10:30 a.m. GMT, the currency had eased from its low of 1.08414 to roughly 1.08523, trimming a 0.02% loss. It looks like the market just took a breath and decided the day was a go‑again.
Services PDIs Spark Hope
Word on the street—well, on the trade charts—is that the services Purchasing Managers’ Index (PMIs) in the eurozone came out just a bit better than the early estimates. That small nudge gave the euro a little lift, despite a surprisingly sharp drop in producer prices and a nasty dip in French manufacturing output.
The final February readings for Germany, France, Spain, and the broader eurozone were a touch higher than their preliminary peers. While the difference is tiny, it nudges us toward a brighter outlook: services activities in the leading economies are getting closer and closer to the “break‑even” line and even hinting at modest growth.
How the Sentiment Shifted
- In Germany and France, confidence levels ticked up to the highest point in over six months.
- That optimism translated into more hires in the services sector.
- Spain and Italy were on the right track, boosting the overall eurozone service output in February.
Price Wars and Production Blues
On the downside, the Producer Price Index (PPI) in the eurozone contracted by 0.9% month‑over‑month in January—up from an 8.6% plunge year‑over‑year—thanks largely to falling energy and intermediate costs. Even after removing energy items, core producer prices actually rose by 0.2% for the first time in a year.
Meanwhile, France’s industrial production took an unexpected nosedive, falling 1.1% month‑over‑month—the fastest decline in a year. No wonder investors were on edge.
Bond Market Drift
The fall in eurozone bond yields, especially from Italian bonds sitting at their lowest since earlier in the year, prevented a full swingback into gains for the euro. German ten‑year bunds were hovering near a 2.364% yield, while Italian bonds dropped to 3.762%, their lowest in more than a month. U.S. Treasury yields for the same tenor also stayed near historic lows for a couple of weeks.
Bottom Line
All signs point to the euro’s recovery being modest but steady. Services PMIs, confidence boosts, and a slight rebound in core producer prices are the main drivers. Meanwhile, the price dip, French industrial slump, and bond yields keep the picture complex—and the market ever so slightly jittery.
