The final Markit PMI readings for March showed the dramatic downturn in business activity across the single-block, putting an already weak Euro under further pressure. According to Chris Williamson, chief business analyst at IHS Markit, the data indicate the Eurozone economy ‘is already contracting at an annualized rate approaching 10%, with worse inevitably to come in the near future’. Employment is expected to fall at a faster rate in the coming months, despite government measures, while the ultimate economic cost of the virus ‘cannot be accurately estimated until we get more clarity on the duration and scale of the pandemic’.
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EUR/USD continues this week’s meltdown and is now eyeing 1.0777 and lower. A break and close below here exposes the recently made three-year low at 1.0636, wiping out all of the March 2020 eight-and-a-half-point rally. Today’s US NFP report may be the catalyst for this move, although today’s report will not capture all the recent job destruction which will become clear in next month’s release. One report (Bloomberg) suggests that early consensus numbers for April may show a 20 million increase in unemployment resulting in an unemployment rate of 15% in the US.