Euro-Zone Services PMI Revised Higher, EURUSD Finds Support Near 1.3800

The Euro-Zone Services PMI contracted for the fourth consecutive month, but was revised higher to 48.4 from a preliminary reading of 48.2. Meanwhile, the PMI reading for Germany was also revised higher to 50.2 from an initial reading of 49.3. Despite the minor improvement, ongoing weakness in the services and manufacturing sector throughout the Euro-Zone has clearly fueled recessionary concerns for the economy, and may lead the ECB to lower the interest ahead of schedule in order to stave off the downside growth risks for the 15 European nations. Meanwhile, the euro-dollar (EURUSD) found support ahead of 1.3800 and edged back in to 1.3855-60 following the Euro-Zone PMI releases. Furthermore, the EURJPY also recovered from European session lows of 145.20 to trade back in to 145.60. The cross rallied sharply in Asian amid reports of strong custodial name demand, which lifted the cross to early European highs of 146.47. Elsewhere, there is speculation that the EU will put out a proposal to insure all bank deposits at the weekend meeting in Paris, which is also helping to underpin the euro.

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