Euro Exchange Rate : The European Commission said growth will slump to 0.1% next year

Euro Exchange Rate : The European Commission said growth will slump to 0.1% next year, having entered recession this year. It’s the worst growth picture since 1993. GDP will contract for three consecutive quarters this year for a full-year total of 1.2%, European finmins are meeting today in Brussels to try to figure out what to do. Bloomberg notes that “While France and Germany led European governments in committing a combined $1.7 trillion to protect the region's banks, and the European Central Bank now offers unlimited loans in an attempt to get credit moving, there has been no unified government response.”

EU Commissioner Almunia said the EU needs better coordination in some areas. The situation is "precarious" as demand from emerging markets is easing (goodbye., exports), although inflation pressure is also easing. The euro exchange rate is closer to fundamentals and the eurozone economy will reach bottom in mid-2009. Seven members will reach deficits breaking Maastricht/Stability Pact with deficits over 3% in 2009. In fact, the Commission will start the "excessive deficit procedure" against Ireland. Oh, and the EU will not allow any new members in until after spring 2010 - they might want some money.

In hard data, the eurozone October manufacturing PMI fell to 41.1 from 41.3 in the flash estimate and 45 in Sept, the lowest ever. In Germany, the October manufacturing PMI fell to 42.9 from 43.3 in the flash and 47.4 in Sept. It was worse in France--40.6 compared to 43 in Sept. Italy had the worst manufacturing PMI ever at 39.7, from 44.4 in Sept. A number under 50 means contraction.

Best Euro rate to buy euros currently 1.2400

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