Weekly Roundup: Euro slides as ECB pauses hiking cycle
Amy Richards October 31st 2023 - < 1 minute read
The euro was muted at the start of last week’s session as investors braced for high-impact events to come.
On Tuesday, the Eurozone’s latest PMIs printed below forecasts to show a deepening contraction in private sector activity in October, triggering a selloff in EUR.
The single currency managed to regain some lost ground after Germany’s business climate indictor improved more than forecast, helping to soothe fears about the health of the Eurozone’s largest economy.
However, the European Central Bank (ECB) interest rate decision then dented the euro. The bank paused its hiking cycle, while dovish comments from ECB President Christine Lagarde added to EUR’s losses.
This kept the common currency on the defensive through to the end of the week.
The euro could face further headwinds moving forward after Eurozone GDP and inflation both came in cooler than forecast.
The bloc’s economy contracted 0.1% in the third quarter rather than stalling as expected. Meanwhile, headline inflation eased from 4.3% to 2.9%, versus forecasts of 3.1%.
These data releases could help cement expectations that the ECB is done raising interest rates, which could weigh heavily on the single currency.