Eurozone PMI Improves, ECB Still Concerned About Strong Euro

The euro held on above $1.38 as investors looked to the European Central Bank for clues about whether or not it would ease further at its upcoming May meeting.

The common currency traded at $1.3828 at 8:00 GMT on Wednesday morning as strong data and uncertainty about the bank’s position kept the euro in a tight range.

Last week, ECB President Mario Draghi told markets that the bank was taking the euro’s strength into account when considering whether or not to ease. He, along with some of his colleagues, expressed their concern about the currency’s recent strength, saying it could be hurting the bloc’s recovery and depressing inflation.

However, although Draghi’s remarks took the currency moderately lower, most don’t expect to see any real weakness until the bank’s May 8 policy meeting.

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Reuters reported that ECB executive board member Benoit Coeure is also concerned about the effects of a strong euro. On Tuesday, Coeure said it would be possible for the bank to take its record low interest rate even lower below 0.25 percent.

However, the single currency was buoyed by data which showed that the region’s business activity was recovering at a better than expected pace. The eurozone’s flash composite PMI came in at 54.0 for April, up from 53.1 in March.

The better than expected figure was driven by a strong performance in Germany, where the composite PMI score was 56.3. French data was concerning as the nation’s figure was 50.5, down from 51.8 in March.

Many worry that France has started to drag on the eurozone’s forward progress as several of the nation’s economic indicators have been disappointing in recent months.