Disappointing Economic Data Weighs on Euro

Euro is heading lower today, thanks in large part to the disappointing economic data released earlier. Also impacting the euro is the geopolitical situation, which brings with it a great deal of uncertainty right now.

The latest economic data out of Germany is somewhat disappointing. German factory orders dropped 3.2 per cent from May to June, constituting the biggest drop since 2011. Germany is a major player in the eurozone economy, and difficulties for Germany often man difficulties for the rest of the 18-nation currency region.

It’s also not helping that indications are that Italy has moved into recession territory, with a second-straight quarter of economic contraction. Coming on the heels of the recent banking scandal in Portugal, this doesn’t bode well for periphery countries, and it indicates that the issues related to the eurozone aren’t over.

Add to all of this the uncertainty surrounding the situation in Ukraine, as well as concerns about the Middle East, and there is a recipe for euro weakness against some of its major counterparts, particularly the US dollar.

At 14:17 GMT EUR/USD is lower, dropping to 1.3355 from the open at 1.3376. Euro has been struggling against the US dollar all session. EUR/GBP is up to 0.7934 from the open at 0.7922. EUR/JPY is down to 136.6970 from the open at 137.2350.

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