Euro drops against dollar as Greece's stocks sink

Today (August 3rd), the euro dropped against the US dollar, due to the Greek stock market opening with an enormous loss of almost 23 per cent, after a five-week hiatus.

Banks were closed in July as part of capital controls imposed by the government to prevent a financial crash happening in Greece, and this seems to have had an effect on the Athens Stock Exchange (ASE).

EUR/USD shed 0.31 per cent to 1.0956, shrinking away from previous highs of 1.0996. Banking shares, which make up almost 20 per cent of the ASE, were trounced, with the country's biggest bank, the National Bank of Greece, losing 30 per cent.

Trading on the exchange was paused during the debt crisis in June, at the point where it seemed that a Grexit was likely, as the government believed this would help stop the country's banking system from collapsing.

The single currency was bolstered slightly by positive data from Markit, which revealed Europe's manufacturing sector experienced steady growth at the start of 2015's third quarter. The reading for the eurozone's manufacturing purchasing managers' index (PMI) for July came in at 52.4, beating expectations of 52.2.  

However, the same could not be said for Greece, as its score plummeted to 30.2, showing a massive contraction due to the capital controls imposed on the country and the drawn-out bailout negotiations.

Against the yen and sterling, the euro was able to hold steady, with EUR/JPY standing firm at 136.03 and EUR/GBP at 0.7029.

The pound barely registered the positive PMI data for the UK, which revealed the manufacturing sector expanded in July, but remained largely inhibited. A score of 51.9 was registered last month, up slightly from 51.4 - the lowest level for almost two years.

Across the pond, a report from Institute of Supply Management, revealed the pace of growth in the US manufacturing sector slowed in July, much to the chagrin of investors. Activity dropped from 53.5 in June to 52.7 last month, disappointing expectations of it remaining unchanged.