Growth in Germany’s Private Sector strengthens Euro

Growth in Germany’s Private Sector strengthens Euro

Recovery has been finally seen in the Euro after hitting an eleven-month low against the US dollar. Growth in German private sector has contributed significantly in the recovery of the European currency. Rise in Treasury yields has helped the US dollar remain afloat, in addition to benefits of widening interest rate differentials. But the US dollar was still recorded trading below 11-month peaks against a range of major currencies.

Losses were further witnessed by the Australian dollar after a preliminary survey of China's manufacturing sector saw its growth slowing to a three-month low.

In the Euro Zone, growth continued in Germany's private sector for the 16th consecutive month in August. It suggested that third quarter is holding great promises for Europe's largest economy.

Business activity was showed stagnant in France during August, although service sector sought some growth. "The German data was better than expected, but it is clear that economic momentum is declining from a month earlier. While the euro can bounce a bit, the upside is rather limited from here", said Yujiro Goto, currency analyst at Nomura.

Goto said the euro is likely to be on a gradual declining path. In the past week, the single currency has shed 1.2%. The dollar rebounded on better-than-expected data.

Slow activity was witnessed by the composite euro zone survey, but some respite was provided by it to the single currency. Some feared a far worse reading. The euro sought a rise of 0.1% to $1.327. The Fed minutes showed policymakers having mixed views about increasing interest rates earlier, after seeing strong recovery in jobs market. Most officials said that it is important to look for further evidence before changing their view.

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