An index based on a survey of purchasing managers in the euro area’s services industry rose to 48.6 from 47.8 in December, London-based Markit Economics said in a report today. That’s above an initial estimate of 48.3 published on Jan. 24. A reading below 50 indicates contraction.
“The final PMI readings for Europe were obviously on the stronger side of expectations, so that has provided a bit more of a boost for the euro,” said Ian Stannard, the head of European foreign-exchange strategy at Morgan Stanley in London. “The underlying trend in the euro is still up but we need to be cautious going into the ECB meeting.”
The shared currency may slide to $1.3350 before the Feb. 7 ECB meeting, before rising to as much as $1.40 in the following weeks, Stannard said.
The ECB, which has held its main refinancing rate at 0.75 percent since July, will make no change at its next policy decision, according to all 58 economists surveyed by Bloomberg News.
Since ECB President Mario Draghi took over from Jean-Claude Trichet on Nov. 1, 2011, Deutsche Bank AG’s trade-weighted index for the euro against peers including the dollar, yen, Swiss franc, pound and Swedish krona has climbed 1.5 percent.
The yen slid after Shirakawa told reporters in Tokyo that he would leave at the same time as two deputy governors on March 19, accelerating a leadership transition that may aid Prime Minister Shinzo Abe’s campaign for aggressive easing. He is scheduled to step down on April 8.
The outgoing chief assured the stability of Japan’s financial system with liquidity injections during the global credit crisis, and again in the wake of the record March 2011 earthquake and tsunami. At the same time, his failure to end the nation’s trenchant deflation stoked criticism from lawmakers, and administration officials have pledged a replacement who shares Abe’s determination to end price declines.
“The next big thing on the horizon for the yen is going to be the next BOJ governor,” Stannard said. Shirakawa’s early departure “shouldn’t have any impact as far as meetings are concerned,” he said.
The yen has dropped 8.1 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro has gained 2.8 percent and the dollar lost 0.2 percent.
Australia’s dollar slid after the Reserve Bank kept its benchmark interest rate unchanged at the half-century low of 3 percent. The so-called Aussie fell 0.5 percent to $1.0383.
Interest-rate swaps data compiled by Bloomberg show traders see a 53 percent chance the RBA will lower its benchmark rate at its next meeting on March 5.