By TraderVox.com
Tradervox (Dublin) – The euro continued with its decline for the fifth day after a report from the region showed that the region’s manufacturing and services industries contracted in the month of April. In addition to this report, the continuing political situation in the region has continued to weigh down on investor confidence with France and Greece expected to hold elections this weekend. Moreover, investors are worried about the worsening economy and they are warning about the region’s ability to cope with the debt crisis.
According to Neil Mellor, a currency strategist at the Bank of New York Mellon Group, the 17-nation currency is set to decline registering its worst weekly decline in a month. Mellor was concerned that the new governments to be elected in Greece and France might not be supportive of the fiscal compacts and austerity measures supported by the previous governments in these countries.
The 17-nation currency fell 0.1 percent against the dollar to trade at $1.3137 after dropping 0.9 percent this week. The euro also registered a drop against the yen, dropping by 0.1 percent to trade at 105.35 yen. It also weakened against the Great Britain pound by 0.1 percent to trade at 81.22 pence, it had earlier dropped to 81.03 pence which is the weakest it had been since June 2010.
The euro is declining after economic reports from the region showed deteriorating state of economy in the region and the current political situation have forced traders to look for safe haven currencies. Moreover, the euro zone composite index for purchasing managers in manufacturing and services has dropped from 49.1 in March to 46.7 in April indicating a contraction in the region’s economy. Another indicator of the regions hardships in the decline in implied volatility for three months on euro against the dollar, which has dropped to 9.6775 percent. On April 27, this touched the lowest at 9.47 which was last registered in August 2008.
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