Euro Stumbles As Business Growth, Retail Sales Stall

The  euro weakened to  a  five-week low against the  US dollar at  the  end of  the  trading week on  the  latest eurozone economic data that is indicating lackluster growth. Despite a  rallying DAX and  FTSE, the  currency could not record any gains, adding to  its string of  losses over the  last month.

According to  Eurostat, the  official European statistics office, retail sales in  the  eurozone rose 0.3% in  June for  a  1.2% annual boost. This is lower than the  0.4% and  1.4% the  market had initially anticipated. Consumers increased their purchases of  food, beverages, tobacco, and  online goods, but they bought fewer clothing and  footwear items. Also, retail sales saw their biggest gains in  Germany and  Spain and  their sharpest decreases in  Estonia, Finland, and  Portugal.
The  eurozone experienced sluggish business growth to  kick off the  third quarter. IHS Markit’s Eurozone Composite Final Purchasing Managers’ Index (PMI) tumbled to  54.3 in  July, down from 54.9 in  June – anything above 50 shows growth.
A  sub-index that measures new orders also slipped to  its second lowest level over the  last 12 months of  54.1. Businesses are not optimistic for  the  future as  the  future output index slumped to  63.1, a  20-month low.
There was another warning sign: the  headcount increased at  a  weaker pace in  June.
Rob Dobson, a  director at  IHS Markit, told Reuters:

The  final PMI numbers confirm the  euro area economy started quarter three on  a  softer footing.

The  outlook seems to  be turning into a  straight choice between the  upturn being sustained at  its current subdued pace or  rising headwinds reining in  growth further during the  months ahead. On  this front, downside risks are more prevalent.

Last week, the  European Central Bank (ECB) left its monetary policy as  is, but policymakers are projecting that it will begin to  tighten policy and  raise interest rates next year. The  Bank of  England (BOE) announced a  rate hike on  Wednesday, bringing rates to  0.75%, their highest levels since the  2009 recession.
The  EUR/USD currency pair slid 0.03% to  1.1583, from an  opening of  1.587, at  14:03 GMT on  Friday. The  EUR/GBP currency pair rose 0.04% to  0.8906, from an  opening of  0.8908.

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