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Weekly Roundup: Euro rocked by abysmal PMIs

currency-newsWeekly Roundup: Euro rocked by abysmal PMIs
The euro was initially muted at the start of last week, with EUR investors unnerved by the result of the French parliamentary election amid fears the lost of President Emmanuel Macron's majority could make the country ‘ungovernable’.

The single currency was quick to find its feet however, rallying on the back of comments from European Central Bank (ECB) policymaker Olli Rehn, in which he suggested ‘it is very likely’ that the bank’s September rate hike will be bigger than 25 bps.

The euro’s negative correlation with the US dollar saw the single currency then extend these gains in the middle of the week amidst a drop in USD exchange rates.

However EUR exchange rates then plummeted on Thursday with the publication of the Eurozone’s latest PMI releases. June’s preliminary figures reported activity in both the manufacturing and services sector slowed much more than expected, raising concerns over the Eurozone’s economic trajectory.

The euro then remained on the back foot at the end of the week after ECB Vice President Luis de Guindos warned the Eurozone may experience negative growth in 2023.

Turning to this week’s session its likely the Eurozone’s consumer price index will be in the spotlight. Will another acceleration of inflation this month bolster ECB rate hike bets and lift the euro?
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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