The euro was extremely weak today, falling against most of its major peers. One of the possible reasons for the slump was largely poor macroeconomic data released in the eurozone on Monday. Another one were comments from European Central Bank officials, which signaled that the ECB is ready to introduce more stimulus.
The IHS Markit Eurozone Manufacturing PMI for June was finalized at 47.6 in June, slightly below the preliminary figure of 47.8 and the May’s reading of 47.7. Being below the 50.0 level, it showed that the manufacturing sector continued to contract. Looking at specific countries, manufacturing was contracting in almost all of major economies, with the exception of France.
On a positive side, the unemployment rate in the eurozone slipped unexpectedly to 7.5% in May from 7.6% in April.
Meanwhile, ECB chief economist Philip Lane signaled that the central bank is ready to introduce more stimulus if need be:
Our assessment is that (our) policy package has been effective and further easing can be provided if required to deliver our mandate. We can add further monetary accommodation if it is required to deliver our objective.
ECB Governing Council member Olli Rehn demonstrated similar sentiment, stating that central banks should be decisive in their actions:
Especially when inflation deviates from its objective for an extended period, central banks â including the ECB â should adopt clear communication strategies that leave no doubt about their absolute commitment to meeting the inflation objective over the medium term.
Today’s underwhelming data suggests that stimulus may indeed be necessary.
EUR/USD crashed from 1.1367 to 1.1287 as of 20:16 GMT today. EUR/GBP declined from 0.8951 to 0.8931, retreating from the session high of 0.8980. EUR/JPY was down from the open of 122.66 to 122.38, pulling back from the session high of 123.35.
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