The Euro eked out some gains against the safe haven currencies as risk appetite was whetted in Asia following news that China’s preliminary PMI manufacturing data for July was better than expected. According to the report from HSBC, the PMI improved to 49.5 in July, boosted by a surge in output which improved to a level not seen in nearly 9 months. Gains were tempered by the growing worries in Spain, with investors now expecting that Spain will follow Greece and Portugal in the need for bailout assistance. The deterioration in the economic outlook for several European nations including Germany and Luxembourg by Moody’s Investor Service to negative is also weighing on sentiment.
As reported at 10:35 a.m. (JST) in Tokyo the Euro was trading against the greenback at $1.2125, retreating from the day’s high of $1.2138 which was triggered by the HSBC data. However, analysts caution that the EUR/USD pair remains close to Monday’s low of $1.2067, coincidentally a 2-year plus low. If the pair drops below the psychologically important $1.2000, then the next target would be $1.1876, the 2010 low. Against the Japanese Yen, the Euro traded at 94.88 Yen, retreating from 95.02 Yen struck immediately after the China news.