Euro Continues to Climb on the US Dollar

The euro has sustained its recovery against the US dollar, and has risen from buying just over  $1.094 up to $1.096 this morning GMT.

Demand for the US dollar has become uncertain, as the markets await the latest non-farm payroll report to be released today.

Societe Generale, in their daily forex report, have outlined the main issues that the euro faces, ahead of the European Central Bank’s (ECB) policy meeting in Frankfurt next week on March 10.

The bank suggests that a timid deposit rate cut would be one of the main risks, and further actions should be taken, following the reduction in rates in December to -0.3% from -0.2%.

Although they admit that further negative rates, could have an adverse effect on the profitability of banks.

The ECB should also refrain from increasing the EUR 60 billion per month asset purchasing programme.

Societe General believe that in the event of disastrous market turbulence, such as the UK leaving the European Union, the ECB should have contingency plans in place, as opposed to buying more assets now.

The UK pound has fallen to the US dollar so far this morning GMT, and is now buying $1.41, from $1.417 as the day began. 

Markit Retail PMI Reveals Stable February Sales 

Retail sales in the euro area have remained stable for February in comparison to the previous month, according to financial information Markit.

Their Purchasing Manager’s Index (PMI), unveiled that retail was placed 50.1 on the scale

As a score of 50 is neutral, this was the highest score that the retail has seen in four months, and ended a period of falling sales that the index found between November and January last year.

Retailers also reported that year on year sales in February were lower, whereas this was the opposite that the survey established for January, where there was year on  year sales growth.

Germany scored 52.5 on the PMI, which was a five month high for Europe’s most powerful economy.

This was a reverse of the marginal dip in retail sales that was recorded for January.

Although these gains were offset by declines in France, who fell to a two month low on the index, totalling 48.l.

While Italy rose to a two month high on the PMI scoring 49.4, this was still a negative total that Markit discovered.

Sales Below Expectation 

Generally, the volume of retail sales for February was disappointing and fell below retailers’ expectations, with the exception of Germany, where targets were surpassed for the first time in two years.

Overall the underperformance that was revealed in the survey, was the least noticeable since August last year.

There is a high degree of optimism amongst retailers for the future, as sentiment for the one month outlook for sales surged to the second highest ever level for the survey,  since it began in 2004.

The positive vision for the retail industry has increased the level of employment, marking four consecutive months of job creation.

And the strongest employment figures in retail for five years, with German and Italian retailers especially taking on extra staff.