Euro exchange rate today: EUR/USD continues to trade sub 1.3 but there are hints of promise on the horizon

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Published on Friday, 21 September 2012 08:45

Written by Rob Samson

The euro (Currency:EUR) is recovering through early morning trade in line with strong equity markets.

The euro dollar exchange rate is 0.18 pct higher on last night's close, EUR/USD is at 1.2995 at 9:40 in London.

The euro pound exchange rate is 0.05 pct down at 0.7999. Again we see EUR/GBP hover around the crucial level at 0.80 - it could prove to be particularly sticky.

"EUR/USD continues to trade sub-1.30 however, weighed down by Thursday’s weak French PMIs. Even a successful Spanish debt auction was not enough to trigger a rebound – given it implies no urgent need for an aid request to the EFSF," notes Gareth Berry at UBS.

However, the outlook does hint at promise.

The Financial Times has reported that EU officials are working with the Spanish government behind the scenes on the details a new economic plan for Spain, which could eventually pave the way for a formal aid request.

"Details are vague but it appears that the Spanish government will submit a structural reform plan to the EU by next
Thursday, hoping that the EU’s “pre-approval” will help it avoid taking tougher austerity measures when it finally
requests EFSF aid," says Berry.

Eurozone PMI numbers for September were not inspiring with the composite PMI printing slightly softer than expectations at 45.9.

Manufacturing and services PMIs is Germany came in stronger than expected at 47.3 and 50.6 in September while the French PMIs trailed consensus at 42.6 and 46.1 respectively.

Greek PASOK party leader Venizelos noted that Greeks have made many sacrifices and the government should not
“burden the society”.

He noted that Greece should be given “another two years” to meet its budget deficit targets and this issue should be broached with the Troika officials. He added that the plan for spending cuts will not be ready for discussion by September 23.

S&P announced that Finland’s AAA rating may be cut if the government ends fiscal consolidation.