Euro Loses Ground on Recession Fears

Euro is losing ground today as recession fears once again come into focus. Disappointing economic data in the eurozone, as well as a growing gap between Germany and the peripherals, are weighing on the euro. Additionally, it’s not helping risk appetite that the data coming out of the United States has turned out to be disappointing as well.

In the eurozone, the news continues to worsen. The unemployment rate in the 17-nation currency region is up to 10.9%. However, it is a matter of concern to many that there is a growing gap between the employment rate in Germany (6.8%), and the unemployment rate in eurozone peripheral countries, like Spain, Portugal, and Italy. Indeed, in Spain, the unemployment rate is at 24.1%. This huge disparity only highlights the imbalances, and underscores possible problems moving forward.
It also isn’t helping that latest manufacturing PMI for the eurozone continues to contract. Concerns about a recession in the eurozone are very real, and it is possible that the region is experiencing one. All of this is weighing on risk appetite and sending the euro lower against its low beta counterparts. Also weighing on the situation is the latest ADP news out of the United States, which shows that job creation in April moved at a much slower pace than expected.
At 14:23 GMT EUR/USD is down to 1.3151 from the open at 1.3235. EUR/JPY is down to 105.3925 from the open at 106.0300.

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