We've had some significant moves in the currency markets this morning. In particular, the euro rose quite sharply on the back of some strong manufacturing numbers out of the Eurozone.
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| Source: Investing.com |
Germany remains the euro area's powerhouse, with manufacturing expansion there accelerating further, driving up the aggregate measure.
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| Source: Investing.com |
European stock markets (followed by the US) however fell in spite of this seemingly good news.
The primary reason for the equity markets' sell-off was the weak manufacturing signals out of China (see Twitter post). As discussed here, China's near-term economic trajectory presents the greatest risk to global growth - particularly for the Eurozone.
The equity markets were also uneasy with the euro strength, which could choke exports from the area. Furthermore, Draghi struck a cautious tone with respect to the area's economic recovery, saying: "All in all, the risk of setbacks is large. I would be very careful not to give an overly optimistic outlook."
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