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Title: Euro falls after weak PMIs weigh; Norway's crown shines

  • Writer: analysiswatch
    analysiswatch
  • Jun 23, 2022
  • 1 min read


Jun 23, 2022 04:41AM ET


By: AnalysisWatch


The euro fell broadly on Thursday after weak German and French purchasing managers' indexes confirmed the euro zone economy is struggling to gain momentum, prompting traders to reduce bets on an aggressive rate hike by the European Central Bank.


Germany's economy, the largest in Europe, slowed sharply at the end of the second quarter, with falling exports acting as a drag and economic uncertainty and inflation weighing on domestic demand, a preliminary survey showed on Thursday.


France's flash manufacturing PMI for June fell to 51.0 points from 54.6 in May, well below forecasts for a smaller drop to 54.0.



Following the data, money markets were expecting a rate hike of around 30 basis points (bps) in July, down from 34 bps on Monday. Traders also reduced their expectation that the ECB will raise rates by 161 bps by the end of 2022, compared with 176 bps on Monday.


Against the US dollar, the common currency fell 0.6% to $1.0498, dropping below $1.05 for the third time this week.


The Norwegian currency was also among the big gainers against the euro after the Norwegian central bank raised key interest rates by 50 basis points on Thursday. It was the biggest single rate hike since 2002 and twice as much as most economists had expected.


The euro's losses lifted the US dollar from earlier lows and pushed the greenback into positive territory against its peers after cautious comments by Federal Reserve Chairman Jerome Powell on Wednesday weighed on sentiment and lowered government bond yields.


Powell told Congress the central bank was determined to bring prices under control even if it risked an economic downturn.



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