23rd February 2024

Euro is heading to record the seventh day of successive gains, with today’s rise by 0.32% and reaching the level of 1.08532 against the US dollar, which represents the highest levels that we have not seen since the second of this February. While the Euro remains almost flat against the British Pound and fluctuates on either side of the 0.85600 level.

The euro’s gains today come with a decline in the pace of contraction in economic activities to the slowest pace in months, in addition to the continued rise in Eurozone bond yields to their highest levels since almost last December.

 we saw the preliminary reading of February PMIs for Germany, France and the Eurozone. Business activities contracted at their slowest pace in eight months in the Eurozone, supported by services sector outputs that came in contrast to factory activities that declined more than expected, according to S&P Global reports.

While weak demand led to a continued contraction in economic activities in Germany, more so in factory activities, which in turn recorded a decline in prices. While activities continue to suffer from high wage costs. On the other hand, activities in France witnessed a calming contraction in February, with the slowest pace of decline in private sector outputs in nine months.

Even with the continued contraction in the Eurozone in general, confidence improved this month and reached the highest level in ten months, which encouraged companies to raise hiring activities at the fastest pace since last July.

As for inflation, the previous preliminary reading for January was set at 2.8% growth in the Eurozone.

The somewhat positive performance in the Eurozone was also offset by a better performance of business activities in the United Kingdom, which grew at the fastest pace in nine months, supported by the continued growth of services activities for the fourth month in a row, in addition to the slowest pace of contraction in manufacturing production since November, according to the S&P Global report also.

In bond markets, the rise in Eurozone bond yields contributed to supporting the region’s currency’s gains today, continuing the upward trend that has extended since the beginning of February. The yield on ten-year German bunds rose to 2.500% before falling slightly to 2.44%.