In European trade on Tuesday (Oct 25), / was trading at 0.9859, down 0.17%.
HSBC senior economist Fabio Balboni said in a note that the eurozone PMI fell further into negative territory in October, particularly in Germany and the eurozone manufacturing sector.
‘This suggests that the euro zone is likely to enter recession in the fourth quarter, if it hasn’t already in the third quarter,’ Mr. Balboni said.
Balboni went further, saying this could be a pretty severe recession, at least for manufacturing.
Despite a looming recession, Europe is set to raise interest rates by 75 basis points in October and will reiterate its view of reaching neutrality as soon as possible, suggesting that another big hike is likely in December.
Eur/USD hovered below 0.9900 in early European trade as the greenback licked its wounds amid a better risk tone.
Despite the eurozone gloom, cooling bets on a big rate rise are supporting the pair.
Germany’s IFO is waiting.
