The euro fell against the dollar on Friday to its weakest level since November 2022, as the market becomes more convinced of a rate cut in December. The European single currency lost more than 1 percent to $ 1.0335.
The so-called purchasing managers’ index (PMI) from trade information company S&P Global unexpectedly pointed to a contraction in activity in the euro zone this month on Friday: the economic indicator fell from 50 in October to 48.1 in November, while analysts had expected it to remain stable. A value below 50 indicates a decrease in activity.
This puts the index at its lowest level in ten months. In November there was a significant deterioration in the services sector.
The indicator fueled market expectations that the European Central Bank (ECB) will cut interest rates further and sharply next month to support the economy. In recent years, the ECB has raised interest rates to a record high in the fight against skyrocketing inflation. The first reduction in almost five years followed in June and was continued in September and October. Each time it involved steps of a quarter of a percentage point. Now traders are betting on a decline of half a percentage point.