Weak French and German PMI data for February sent EURUSD plunging to fresh year to date lows as the pair broke through the 1.3200 level in morning European trade. The French PMI Services report hit 42.7 versus 44.5 eyed as it reached a fresh 48 month low. French PMI Manufacturing improved to 43.6 from 42.9 but nevertheless fell short of 43.9 forecast.
In Germany the PMI Manufacturing report came in at 50.1 versus 50.4 expected while the PMI Services data declined to 54.1 versus 55.5 eyed. Overall the EZ flash PMI numbers also missed their mark with Manufacturing coming in at 47.8 versus 48.4 projected while services plunged to 47.3 from 49.2 expected.
Both Manufacturing and Service sectors remain well below the 50 boom/bust line indicating that EZ GDP will continue to contract in Q1 of this year. Some analysts have even predicted that the EZ growth will not turn positive until Q3 of 2013.
Today’s data stands in sharp contrast to the consensus market expectations that the region will see turnaround in growth as soon as Q1 of this year. The latest business sentiment surveys have lulled currency traders into thinking that economic conditions are beginning to improve, but today’s reports clearly signal the opposite.
The EUR/USD has found some support near the 1.3200 figure, but today’s news is likely to weigh heavy on the pair and if risk aversion flows accelerate as North American session comes on line then the pair could test the 1.3150 level as the day proceeds.