Sterling Falls Against The Euro As The EZ's PMI's Come Out Better Than Expected

Daily Forex Fundamentals | Written by Finotec Group | Aug 24 09 09:09 GMT |

Sterling fell to a one-month low against the euro on Friday, hit by brighter data that bode well for the pace of the euro zone's recovery, although the rise in investors' appetite for risk drove it higher against the dollar. Flash estimates of the Market composite purchasing managers' index (PMI) for Germany, France and the euro zone as a whole all reached the boom or bust 50 mark, beating market forecasts and showing growth was likely in the third quarter. 'We saw a turnaround from nervous markets overnight, and the positive PMI, which exceeded expectations, provided an additional boost to sentiment,' said Christian Lawrence, currency strategist at RBC Capital Markets. The EUR/GBP is currently trading at $0.8675 as of 9:30am, London Time. The yen weakened against the euro as improving economic data and central bank comments that the global recession is abating spurred investors to buy higher yielding assets. The euro traded near the strongest level in two weeks against the dollar before a report that economists said will show European industrial orders fell at a slower pace. Asian stocks extended a global rally after Federal Reserve Chairman Ben S. Bernanke said last week chances for near-term growth 'appear good.' 'Bullish comments from Bernanke combined with positive data in the U.S. and Europe are helping calm anxiety about the global economy,' said Koji Fukaya , a senior currency strategist in Tokyo at Deutsche Securities Inc. The yen and dollar are likely to be sold against higher-yielding currencies as 'risk-appetite improves.' The USD/JPY is currently trading at 94.95 as of 9:00am, London Time. European Central Bank officials led by President Jean-Claude Trichet greeted mounting evidence of an economic recovery with caution, suggesting they won't rush to reverse their emergency stimulus. 'We see some signs confirming that the real economy is starting to get out of the period of freefall,' Trichet said at the Federal Reserve's annual symposium in Jackson Hole, Wyoming, on Aug. 22. This 'does not mean at all that we do not have a very bumpy road ahead of us.' 'Even with the pretty nice figures we've been seeing, some at the ECB question how sustainable the recovery is,' said Gilles Moec, a former Bank of France official and now an economist at Deutsche Bank AG in London. ''The ECB is not yet looking to start ending their exceptional measures.' The EUR/USD is currently trading at $1.4290 as of 9:42am, London Time. Finotec Group Inc. http://www.finotec.com/ Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.