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Euro falls on weak data

MOSCOW, June 23 – PRIME. The euro fell against most other currencies on Thursday after the release of weak Purchasing Managers’ Indices (PMI) for Germany and France. The data confirmed that it is difficult for the Eurozone economy to pick up momentum and prompted traders to revise their forecasts for raising the key rate of the European Central Bank.

Wall Street futures rise ahead of labor market data

Rising prices in the euro area in June led to a contraction in demand for manufactured goods at the fastest pace since May 2020, and the preliminary Purchasing Managers Index (PMI) for the manufacturing sector of the euro area fell to a nearly two-year low of 52.0 from 54.6 in May .

“Indices have not been as strong as expected,” Equiti Capital economist Stuart Cole said.

“ECB leaders will take into account today’s data, but will prefer to wait for confirmation from objective data before changing direction.”

Following the release of the data, markets quoted interest rate hikes of around 30 basis points in July from 34 on Monday. They also lowered their expectations for a cumulative rate hike by the end of 2022, to 161 basis points from 176 on Monday.

At the time of writing, the EUR/USD pair is down 0.6% to 1.0498, falling below 1.05 for the third time this week. Against the Japanese yen, the euro fell more than 1%.

Losses in the euro lifted the US dollar from earlier lows, giving it strength against other major currencies. The weakening of the dollar was provoked by cautious statements by Fed Chairman Jerome Powell, which had a negative impact on investor sentiment.

Markets with a high degree of confidence expect the Fed to raise its key rate by 75 basis points in July. At the same time, some analysts predict that the ECB and the Bank of England will choose less aggressive trajectories of tightening policy in order not to risk economic growth.

Powell said on Wednesday that the possibility of a recession “is definitely there,” reflecting markets’ fears that the pace of the Fed’s rate hike could dampen economic growth. Later Thursday, Powell will address the House of Representatives.

The Norwegian krone received no sustained support from Thursday’s 50 basis point hike in central bank interest rates, doubling most economists’ expectations and the biggest single rate hike since 2002.

After the rate hike was announced, the krone rose slightly against the US dollar, but then retreated, while the dollar rose against other major currencies. At the time of writing, the krone was trading down 0.6% against the dollar and almost flat against the euro.

Source: 1prime

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