European session review: EUR depreciates after grim PMI data

EUR fell against other major currencies in the European session on Thursday as the latest euro-area PMIs revealed the devastating consequences of the coronavirus lockdowns.

The flash data from IHS Markit showed an unprecedented collapse of the Eurozone economy in April, resulting from efforts to contain the virus outbreak across the continent. According to the report, the flash IHS Markit Eurozone Composite PMI tumbled to an all-time low of 13.5 this month, down from a prior record low of 29.7 in March. Economists had expected the index to fall to 25.7 in April. The Eurozone's service sector bore the brunt of the impact from the lockdown measures, with the business activity index dropping from 26.4 in March to just 11.7 in April, well below economists' forecast of 23.8. The region's manufacturing also saw a sharp decline in business activity, with the PMI dropping from 44.5 in March to 33.6 in April, also below economists' estimate of 39.2.

The IHS Markit noted that the unprecedented scale of the collapse was broad-based, with composite flash PMI output indices hitting all-time lows of 17.1 and 11.2, respectively, in Germany and France (down from 35.0 and 28.9 in March), while the rest of the region saw the composite PMI drop from 25.0 to 11.5.

Elsewhere, the European Central Bank (ECB) announced it would begin accepting some junk-rated bonds as collateral for its loans, in-line with speculation from yesterday.

Market participants are also awaiting Thursday's virtual meeting of the European leaders, at which they are to discuss the funding of the economic recovery in the EU.