The index was dragged lower by weak readings out of the bloc’s largest economy. The Spanish and the Italian Services PMI indicators have increased from 54.1 to 56.0 respectively from 52.0 to 52.3 points, signaling that the services sectors have continued the expansion.
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Economists believe that this slowdown in Germany might prompt the European Central Bank to unveil further stimulus.
The euro slid to 1.1139 dollars before rebounding slightly to around 1.1145 in late European session, while the pound came off its 7-week highs of 1.3375 dollars from after the data to ease to around 1.3320 in late trading.
The inventories index also fell by 0.5 points from its July figure.
Eurostat reported that year over year Euro area retail sales rose 2.9 percent in July versus a 1.7 percent rise in June, on the month retail sales rose 1.1 percent. Monday’s session had seen the price of a barrel of Brent Crude spike by over 5% as investors priced in the news that Russian Federation and Saudi Arabia are set to hold talks aimed at forcing the price of “Black Gold” higher. U.S. crude shot up to $46.53 a barrel, while Brent crude rose to $49.40.
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These concerns regarding the state of America’s economy had the attendant effect of strengthening Euro (EUR) exchange rates via arbitrage funding as investors shifted out of the Buck, and this in turn saw the Pound Euro (GBP EUR) exchange rate fall back towards the 1.1900 GBP EUR threshold. Saudi Arabia’s energy minister was quoted as saying that a production freeze is the “favourable option, but not necessary today”. Italy’s came in at 52.3, from 52.0 and against an expected 51.8.
