Euro falls to one-week low on weak manufacturing surveys

London

THE euro fell to a one-week low on Thursday after weak manufacturing surveys in Europe raised concerns about an economy struggling to gain traction before the long Easter weekend.

Activity in Germany's manufacturing sector shrank for a fourth straight month in April, while a similar survey from France also painted a bleak picture.

"Investors are worried about the health of the global economy and the eurozone and the fortunes of the euro are closely tied with that," said Ricardo Evangelista, a senior analyst at ActivTrades in London.

The single currency was up as much as 0.1 per cent before the data but fell 0.4 per cent to its lowest level since April 10 to US$1.1244 after the data releases.

A week ago, European Central Bank president Mario Draghi raised the prospect of more support for the struggling eurozone economy if its slowdown persist.

But the prospects of more stimulus has failed to lift the general gloom over the euro's outlook.

The euro was still more than 2 per cent below a 2019 high of US$1.157. Investors have cut their holdings of the currency, with net short bets at their highest in more than two years, according to latest positioning data.

The euro's decline comes amid a general drop in currency market volatility. A JP Morgan volatility index was near 2008 lows.

The dollar index against a basket of six major currencies was nearly flat at 97.051, after dipping 0.05 per cent the previous day.

Commodity-linked currencies sagged after a surge in crude oil prices ran out of steam.

The Australian dollar was flat at US$0.7179 after briefly popping above US$0.72 on strong jobs data for March. REUTERS