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Euro slips as Eurozone suffers record growth contraction

currency-newsEuro slips as Eurozone suffers record growth contraction
The euro dove at the end of last week’s session as the Eurozone reported a sharp drop in GDP in the second quarter.
 
Meanwhile, the pound opens this week on stable footing, with GBP/EUR flat at €1.1121 and GBP/USD static at $1.3073. GBP/CAD and GBP/NZD are holding steady at C$1.7542 and NZ$1.9733 respectively, while GBP/AUD has advanced to AU$1.8372.
 
Today the spotlight will be on the US ISM manufacturing PMI. Will a rise in US factory activity help revive the US dollar?
 

What’s been happening?

 
The euro found itself on the defensive again on Friday following the publication of the Eurozone’s latest GDP estimate.
 
Data published by the European statistics agency revealed the Eurozone economy shrank by a startling 12.1% in the second quarter, the largest contraction on record.
 
This plunged the bloc into its first recession since the euro crisis and tempered hopes for a swift rebound through the second half of 2020.
 
Trade in the US dollar was a little mixed at the end of last week’s session with the recent USD selling bias offset by a modest recovery in safe-haven demand.
 
Also aiding the ‘greenback’ was the publication of data reporting an additional recovery in US consumer spending throughout June.
 
The pound, meanwhile, maintained its bullish momentum on Friday, punching higher against its peers in spite of Boris Johnson’s announcement that it is time to ‘squeeze the brake pedal’ on the further easing of lockdown measures.
 

What’s coming up?

Turning to the start of this week’s session, the spotlight will be on the latest ISM manufacturing PMI from the US.
 
Economists are forecasting an expansion in the manufacturing sector, but will this be enough to pull the US dollar out of its recent slump?
 
For EUR investors the focus is on the Eurozone’s finalised manufacturing PMI for June, with the euro potentially strengthening if growth in the factory sector is revised higher.
 
Meanwhile, the pound may struggle to extend its bullish run through this week’s session as GBP investors brace for the Bank of England’s (BoE) latest policy meeting later in the week.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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