There have been umpteen numbers of strong reasons to worry over current economic weather. We have been hearing series of bad news consistently that is troubling Euro. It has posted a decline in the index of headline economy-wide output in Euro zone from 54.0 to 53.5 which are in disparity to the consensus and expectation of a little rise. The fall reflected declines in both the manufacturing and services components. This is confirmed with the fall in the euro-zone composite PMI numbers in April. It suggests that the serious cause of concerns over Greece might already be starting to hamper the growth in the Euro zone. While looking ahead, PMI figures in the French composite slid to 50.2 signifying that the early signs of a recovery in France's economy in Q1 should be treated with caution.
So can we have a count now what else is disturbing Euro to be intact? Yes indeed, one more prominent player in this region alarms with the drops seen in both the German ZEW investor sentiment index and the flash measure of euro-zone consumer confidence in the same month. The limited country breakdown revealed a small fall in the German index, but at 54.2 it remains at a relatively high level and is consistent with fairly decent GDP growth for now.
Hence, as a whole region's economic weather sensing more pressure day by day and failed to gain momentum in its recovery at the beginning of forward the GDP is in a clear risk that the composite fall in euro-zone's PMI highlights Greek risks of possible euro exit intensify and raising the threat of a renewed economic slowdown in the euro-zone. With all the above negative shades Euro currency is at stake in the days to come.
Euro spot prices against major currencies (0600 GMT)
EUR/USD - 1.0810 (-0.13%)
EUR/GBP - 0.7182 (-0.10%)
EUR/JPY - 129.2200 (-0.16%)
EUR/AUD - 0.7193 (0.10%)
The uncertainty around the election outcome itself appears to be strongly embedded in options prices, with a spike in volumes that cover the election period. In EUR/GBP, for example, ATM volume on options that expire just before the election is around 9.9% (mid-price) and options that expire just after the election 11.1%.
