Euro Dives to New 2-month Low

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The euro sank to a new two-month low against the U.S dollar today. 

Investors eagerly await news from the European Central Bank’s (ECB) policy meeting, which takes place today, to confirm whether borrowing costs will reduce.

Mounting pressure on the euro comes from recent data showing Germany’s manufacturing sector contracting at the quickest pace in seven years, while French business growth also unexpectedly slowed.

A deteriorating outlook for inflation figures across the eurozone and concerns over the continuing Sino-US trade war may also help explain why the euro is now down around 2% in July. 

The ECB announces its rate decision at 1145 GMT, followed by a news conference at 1230 GMT.

There remains much uncertainty surrounding the meeting. Some analysts expect the ECB to restart Quantitive Easing, while others expect Mario Draghi and the Governing Council to wait until new forecasts are published in September before taking any action.

Meanwhile, EURCHF, which has managed to stay afloat due to expectations of the lower rates in the eurozone, has reached a new two-year high of 1.0965 against the common currency – trading at 1.0969.

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