The euro extended losses against the dollar after weak euro zone data purchasing managers index (PMI). The Markit euro-zone composite PMI dropped from January’s 50.4 down to 49.3 in February , which was below an earlier, preliminary estimate of 49.7.
The euro zone services PMI index also dropped to 48.8in February from a previous 49.4.
Looking at individual euro zone economies, Germany’s composite PMI fell to a two-month low of 53.2 in February, though a reading above 50 indicates an expansion phase. A reading of less than 50 indicates a contraction in private-sector business activity, which is what Italy and Spain had, both PMI’s reaching two-month lows. Italy’s PMI slid to 44.7 and Spain’s fell to 42.9
“At this stage, our best estimate is that the region’s GDP will have contracted by 0.1 percent in the first three months of the year. Perhaps more worryingly, the ongoing steep declines signaled by the weak surveys for Italy and Spain suggest that a return to growth for these countries still looks to be a long way off,” said Chris Williamson, chief economist at Markit.
EURUSD slid from a European session high of 1.3197 to 1.3159.