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Weekly roundup: Euro falters as Eurozone recovery runs out of momentum

currency-newsWeekly roundup: Euro falters as Eurozone recovery runs out of momentum
September’s Eurozone services PMI delivered a significant upset last week, leaving the euro on the back foot as the sector reported a notable contraction.
 
Investors were caught off guard by the decline into contraction of 47.6, below the stagnation level of 50, having anticipated a reading of modest growth at 50.5 instead.
 
With the sector looking set to come under even greater pressure in the final months of the year, given the recent spike in Covid-19 infections, fears of a renewed economic slowdown mounted.
 
The bearish mood put additional pressure on EUR exchange rates after European Central Bank (ECB) President Christine Lagarde called for greater fiscal support
 
After Germany’s inflation rate fell to -0.2% today, the euro could face further selling pressure on Friday if the Eurozone consumer price index proves disappointing as well.
 
As long as the headline inflation rate remains negative, this would give the ECB greater cause for concern, with inflation falling significantly short of its 2% target.
 
The Eurozone’s inflation rate appears unlikely to pick up from August’s 0.2% reading, given Germany’s negative inflation rate which likely pressure the single currency.
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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