The euro plummeted against the dollar following German PMI (purchasing managers index) which was much lower than expected. Germany’s flash manufacturing PMI fell under the 50 threshold that indicates growth. Meanwhile the euro zone business activity shrank further in March, suffering its biggest contraction in three months, fuelling concerns of recession. EURUSD dropped to a session low of 1.3132 from 1.3253.
The dollar extended gains against the euro after U.S. jobless claims data which the markets interpreted as being better in comparison to the appalling data so far today from Europe and China. Initial jobless claims were lower than expected, close to four year lows. Also what gave the market confidence in the U.S. economy was that the prior numbers were revised up.
Sterling dropped sharply against the dollar after poor U.K. retail sales data. GBPUSD dropped to a London session low of 1.5769 from 1.5891. UK sales dropped lower than expected by 0.8 percent from a 0.4 percent drop that was forecast. What was worse was that the January number was revised down to 0.3 percent from 0.9 percent in the initial estimate.
USDJPY shot up to 83.17 from a low of 82.66 following the U.S. jobless claims data. Earlier in the day the dollar had fallen against yen on low risk appetite after China PMI and on the back of a trade surplus data from Japan which helped lift yen. EURJPY which had dropped to 108.76 from 110.45, driven down by weak PMI across Europe, bounced back up to 109.55 after US jobless claims data.
USDCAD surged to 0.9997 after US jobs data and weaker Canadian retail sales. The commodity-price sensitive Canadian dollar began to decline earlier in the day on lower commodity prices. Crude oil, a major Canadian export, fell to US$105.66 from US$106.75 due to concerns of slowing global growth and subsequently lower demand for oil after weak Chinese and European PMI data. The slower Canadian retail sales data further hurt the loonie.
The Australian dollar extended losses against the greenback into the European session after falling earlier in Asia in reaction to weak China PMI data. AUDUSD fell to a two-month low 1.0354, sliding from a European session high of 1.0415. The HSBC March China manufacturing PMI fell to 48.1 from a previous 49.6, showing contraction for a fifth straight month, fuelling concerns about a slowdown in the second largestglobal economy. China is a major trading partner for Australia and is sensitive to any signs of weakness in their economy.