Euro Weakens After German Composite PMI Falls

(RTTNews) - The euro weakened against other major currencies in the European session on Thursday, following the release of Germany's composite output index for May.

The Purchasing Managers' survey compiled by S&P Global showed that the German HCOB composite output index fell to a five-month low of 48.6 in May from 50.1 in April.

The services Purchasing Managers' Index hit a 30-month low of 47.2 in May, down from 49.0 in the previous month. At 48.8, the manufacturing PMI reached a 33-month high and up from 48.4 a month ago.

Meanwhile, the Ifo institute's business climate index for Germany rose to 87.5 in May from 86.9 in the previous month. The score was forecast to rise to 87.4.

In other economic news, the euro area private sector logged a renewed fall in May due to a sharp downturn in services activity. The flash HCOB composite output index fell to 49.5 in May from 50.4 in April.

European stock markets also traded lower as investors reacted to a U.S. Treasury sell-off, mixed regional data and some disappointing earnings.

Another factor weighing on the Euro is the strong expectation that the European Central Bank (ECB) would lower interest rates again at its June policy meeting.

Officials at the European Central Bank have indicated that additional monetary policy expansion is required to mitigate negative risks to Eurozone inflation.

In the European trading today, the euro fell to more than a 2-week low of 161.80 against the yen, from an early high of 162.88. The next possible downside target for the euro is seen around the 160.00 region.

Against the pound and the Canadian dollar, the euro dropped to 2-day lows of 0.8420 and 1.5663 from early highs of 0.8450 and 1.5714, respectively. If the euro extends its downtrend, it is likely to find support around 0.83 against the pound and 1.54 against the loonie.

Against the U.S. dollar and the Swiss franc, the euro edged down to 1.1290 and 0.9330 from early highs of 1.1345 and 0.9352, respectively. The euro is likely to find support around 1.11 against the greenback and 0.91 against the franc.

Looking ahead, Canada PPI and raw material prices for April, U.S. weekly jobless claims data, U.S. existing home sales data and PMI data for May and U.S. Kansas Fed composite index for May is slated for release in the New York session.