Euro Hits Record Highs Despite Evidence of Euro Driven Economic Weakness

The Euro climbed to a new record high today at the onset of US trading but the currency pair struggled to hold onto those gains amidst earlier data that revealed the first signs of Euro driven economic weakness. The current account balance came in much weaker than expected, with the deficit rising to 8.6 billion from 4.0 billion the prior month. Analysts were looking for an improvement since up until today?s releases the Eurozone was relatively resilient in the face of a strong Euro.

The manufacturing PMI index also deteriorated more than expected which suggests that Thursday?s German IFO survey could fall more than analysts are currently predicting. The Belgian manufacturing survey, which is frequently used as a leading indicator for the IFO dropped 2 points in the month of July. Meanwhile we also heard one of the first Euro critical comments from an ECB official. Stark warned earlier today that exporters were being hurt by the strong Euro. Is this the beginning of more warnings about currency strength from the central bank? Probably not. There are no more scheduled speeches by ECB officials this week and next week, they go off on their month long summer holidays.