Euro Lower As PMI Data Misses

German combined flash PMI data for April missed its mark printing at 50.9 versus 51.6 in March as the Manufacturing sector recorded its lowest reading in more than 33 months. German PMI Manufacturing came in at 46.3 versus forecasts of 49.0 as exports showed their steepest decline since last November. French data was weaker as well with both services and manufacturing data also missing estimates.

The weak PMI reports suggest that growth in core European economies is in peril undermining any expectations of a rebound to positive GDP in Q2 of this year. German composite PMI tends to be a strong leading indicator to overall GDP growth and as it teeters on the edge of the 50 boom/bust line it indicates that Europe’s leading economy main remain in recession for the near term.

EUR/USD was already under pressure as the week began weighed by the first round election results in France and below 50 reading from Chinese PMI reports. The flash PMI data pushed the pair below the 1.3150 level and could press it to test 1.3100 as the day proceeds.