FOREX-Euro falls after weak PMIs weigh; Norway's crown shines

Reuters

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    By Saikat Chatterjee
    LONDON, June 23 (Reuters) - The euro fell across the board
on Thursday after weak German and French PMI data confirmed the
eurozone economy was struggling to gain traction, prompting
traders to trim aggressive interest rate hike bets by the
European Central Bank.
     The German economy, Europe's largest, suffered a sharp loss
of momentum at the end of the second quarter, with falling
exports acting as a drag and economic uncertainty and inflation
weighing on domestic demand, a preliminary survey showed on
Thursday.  urn:newsml:reuters.com:*:nZRN004KDP
    The French June flash manufacturing PMI number fell to 51.0
points from May's 54.6, well below a forecast for a smaller fall
to 54.0 points.  urn:newsml:reuters.com:*:nZRN004KDJ
    "The below forecast PMIs fuels debate about worsening
growth, softer yields and begs the question how much ECB can
genuinely raise rates," said Kenneth Broux, an FX strategist at
Societe Generale in London.
    Following the data, money markets were pricing in about 30
basis points (bps) of rate hikes in July compared to 34 bps on
Monday. Traders also trimmed their expectations of how much the
ECB will hike rates by end-2022 to 161 bps compared to 176 bps
on Monday.
    Against the U.S. dollar, the single currency  EUR=EBS 
declined 0.6% to $1.0498, falling below the $1.05 line for the
third time this week.
    The Norwegian currency was also one of the big gainers
versus the euro after its central bank raised benchmark interest
rates by 50 bps on Thursday, its largest single hike since 2002
and twice as much as expected by most economists.  urn:newsml:reuters.com:*:nL8N2YA1P6
    The euro's losses yanked the U.S. dollar from earlier lows
and sent the greenback into positive territory against its
rivals after cautious comments by Federal Reserve Chair Jerome
Powell on Wednesday weighed on sentiment and pushed Treasury
yields lower.
    Powell said in testimony to Congress that the central bank
is fully committed to bringing prices under control even if
doing so risks an economic downturn. 
    He said a recession was "certainly a possibility,"
reflecting fears in financial markets that the Fed's tightening
pace will throttle growth.  urn:newsml:reuters.com:*:nL1N2YA07V Powell testifies to the
House later in the day.

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World FX rates    https://tmsnrt.rs/2RBWI5E
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 (Reporting by Saikat Chatterjee; Editing by Kim Coghill)
 ((saikat.chatterjee@thomsonreuters.com; +44-20-7542-1713;
Reuters Messaging: saikat.chatterjee.reuters.com@reuters.net))

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