Speculators responded to the plan of a Japanese bank to acquire the airline financing business owned by a German bank worth billions of euros. The euro was boosted quite high in Friday's trade, due to anticipation of speculators responding to a Japanese bank's plan to acquire an airline financing business owned by a German bank worth billions of euros. The EUR / USD currency pair briefly hit its highest level in almost three weeks in the range of 1.1294, while EUR / JPY rocketed 0.5 percent to 126.27, and EUR / GBP climbed 0.26 percent to 0.8643 at the start of the European session.

Boost of Japan and Germany Transactions

Dealers interviewed by the Reuters news agency said that Euro buying today was a response to Mitsubishi UFJ Financial Group's plan to buy the airline's financing business owned by DZ Bank, Germany's second largest bank. Based on calculations in June last year, this business was worth 5.6 billion Euros. Mizuho Securities' Masafumi Yamamoto said, "It's not surprising if the Euro is able to react quickly to factors that have a potential positive impact, because the fundamental conditions surrounding the Eurozone economy are starting to show signs of improvement."

Yamamoto's statement was related to reports of French and Italian industrial output for February that was better than expectations. The news of the recovery of the industrial sectors of the two countries with the most complex economic and political crisis in the Eurozone offers a positive signal which is considered quite encouraging, although investors will certainly still monitor the release of other economic data.

Conversely, the strengthening of the Euro actually suppressed the US Dollar index (DXY) to decline 0.16 percent to 97.00 levels, although the Greenback had strengthened after the release of PPI data last night. The reason is, US consumer inflation data released earlier, is considered still disappointing and the central bank's policy direction still tends to dovish.

Manufacturing and Eurozone Inflation PMI Weakened

Eurozone inflation continues to move away from central bank targets, while German and French companies suffer setbacks. The release of a series of Eurozone economic data in the middle of today's European session underscored the severity of the region's economic downturn. Not only did German manufacturing industry weaken, Eurozone inflation was further away from its central bank target. Around an hour after the release, the EUR / USD currency pair still recorded a bullish candle on the Daily time frame, but it has not been able to come out from below the 1.1250 level where it has fallen since last weekend.

Worst Core Inflation In Nearly A Year

Eurostat reported that the Consumer Price Index (CPI) was revised down from 1.5 percent to 1.4 percent (Year-on-Year) for March 2019. The Core CPI also dropped from 1.0 percent to 0.8 percent, the lowest in the past eleven months. The two Eurozone inflation indicators remain weak, even though the employment sector has improved. The latest data on the Eurozone unemployment rate is at the level of 7.8 percent, the lowest in more than a decade. However, tightening the employment sector failed to boost employee payrolls and inflation, due to deteriorating global demand and the climate of the manufacturing sector that took the attention of the corporation.

German Manufacturing Sector and France Collapsed

Meanwhile, IHS Markit reported that the PMI for the German manufacturing sector slipped to 44.1 in March 2019, worse than the initial estimate pegged at 44.7. The French manufacturing sector was also revised down to the level of 49.7. With the two largest economies experiencing setbacks, the Eurozone Manufacturing PMI slipped from 47.6 to 47.5.

The cause is not only the Eurozone's internal problems, but also the side effects of the Brexit impasse and the global economic slowdown. As revealed by Phil Smith of IHS Markit regarding the German manufacturing sector, "More and more companies are reporting a decline in demand due to Brexit and trade uncertainty, problems in the automotive industry, and generally weaker global demand.