November 25, 2024: EUR Weakens on Declining PMI

25 November 2024  

MARKET REPORT

RECAP

On Friday, the euro faced significant volatility, with EURUSD dropping to two-year lows. This decline was fueled by a larger-than-expected fall in PMI activity for November, which also raised market expectations of a potential 0.50% ECB rate cut in December. Meanwhile, GBPEUR reached 2024 highs, reflecting the
pressure on the euro.

The pound also struggled, weighed down by weaker-than-expected retail sales and disappointing PMI data. In contrast, US PMI figures came in higher than anticipated, supporting the argument for a stronger US economy.

OUR SUMMARY

The week began with a weaker USD across the board, following President-elect Donald Trump’s selection of Scott Bessent as the next US Treasury Secretary. Bessent, known for his fiscal hawk stance, is expected to prioritize lower deficits, controlled inflation, and a cautious approach to tariffs.

With Thanksgiving on Thursday and an early market close on Friday, this will be a shorter week in the US. Key data points to watch include the release of the Fed’s November FOMC minutes on Tuesday and the core PCE number on Wednesday.

The euro has managed to recover some of Friday’s losses against the USD. However, to sustain this recovery, EUR will need stronger consumer confidence figures on Thursday and a higher
CPI reading on Friday.

The UK will see a quiet week, with limited data expected to move the markets. After a challenging Friday, there are few catalysts to change GBP’s outlook.