More Euro weakness

The euro has been declining in recent weeks against the US dollar, dropping from 1.1000 to around 1.0830 before a slight rebound. Against the pound it has been lower too around 1.17 at the high point of the range.

This can be attributed to concerns about the weak economic output in the Eurozone, particularly as Germany and the region as a whole face the possibility of a recession.

The European Central Bank's ability to raise interest rates beyond the expected 25bps move this month is being questioned. The latest PMI data indicates further weakness, with German manufacturing PMI slipping to 40.6 in June, indicating a contracting economy. Services PMIs also missed expectations.

Retail sales remained flat, disappointing expectations of a rebound. German factory orders declined at a slower pace. The euro is currently losing ground in terms of future interest rate hike expectations, with the Federal Reserve and the Bank of England taking the lead.

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