Euro Inches Higher Despite Sour Data

The Euro edged higher to 1.3219 during the Asian trading session recovering from a sharp and broad decline on Thursday as market players view less than sterling economic data as evidence that the Eurozone’s recession continue to press onward, the result that the ECB might consider a rate cut in the months ahead. Markit Economics reported that Euro area Purchasing Managers’ Indices improved less than expected in France and Germany and the Eurozone as a whole. In France, February’s preliminary PMI reading for the manufacturing sector dropped to 43.6 against expectations of a rise to 43.8, while in Germany the reading managed to break the 50.0 threshold which separates expansion from contraction but at 50.1 was less than the 50.5 expected.

As reported at 2:12 p.m. (JST) in Tokyo, the EUR/USD pair was trading at 1.3211, a 0.16% gain from Thursday’s 6-week trough of $1.31615. The EUR/JPY pair was also recovering from the 3-week low which was struck yesterday, and was earlier trading at 122.85 Yen, a gain of 0.1%.

This weekend’s Italian parliamentary election is also of concern to Euro investors who worry that the outcome won’t be in favor of Prime Minister Mario Monti’s party, which investors view as the more Euro-friendly. At the heart of the concern is that former Prime Minister Silvio Berlusconi could find himself back in charge of the economic chaos that he had helped to create before being ousted.