EUR/USD edges lower amid recession clouds

The EUR/USD pair trimmed most of its weekly gains on Thursday, hovering around 1.0530. The US dollar benefited from a souring market sentiment. The negative sentiment was triggered by more comments by Fed Chair Jerome Powell and macroeconomic data pointing to a sharp economic slowdown.

The flash S&P Global PMIs for June painted a gloomy picture as EU economic activity hit a 16-month low, reflecting a stalling of demand growth. The manufacturing PMI contracted to 52, while the services index shank to 52.8 from 56.1 in May.

In Germany, the report showed activity lost momentum at the end of the second quarter while adding that “firms’ expectations towards future activity slumped to their lowest since the first wave of the COVID pandemic over two years ago, with manufacturers growing increasingly pessimistic about the outlook. Germany’s flash Manufacturing PMI printed at 52, while the services index came in at 52.4.

Finally, the US manufacturing index slowed to 52.4 in June, an almost two-year low, while the Services PMI contracted to 51.6 from 53.4 in the previous month, a five-month low. The US also published Initial Jobless Claims for the week ended June 17, which rose to 229K, while the Q1 Current Account posted a deficit of $ 291.4 billion, both missing the market’s expectations.

On Friday, the macroeconomic calendar will include the final readings of the German Q1 Gross Domestic Product and the June IFO Business Climate survey. On the other hand, the US will release the June Michigan Consumer Sentiment Index and May New Home Sales.