The Euro fell after weak data indicated slowing economic activity

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The euro fell on Monday after data indicated a slowdown in the euro-zone economy, ahead of a raft of key central bank policy decisions later in the week.

The single market currency fell 0.4 percent against the dollar to $1.109 after the region’s composite PMI, a measure of manufacturing and services activity in the region, fell to an eight-month low of 48.9 in July from 49.9 in June.

The reading was the second month in a row that the index came in below the 50 mark, indicating that the majority of companies reported a contraction in activity, as higher borrowing costs weighed on the economy.

A 0.25 percentage point increase in the European Central Bank’s benchmark interest rate, to 3.75 percent, is considered almost certain when policymakers meet on Thursday, with further upward movement likely in the coming months.

The pan-European region Stoxx 600 added 0.1 percent, recouping early morning losses, as did the German Dax and FTSE 100 in London. France’s Cac 40 Index lost 0.2 percent, weighed down by a drop in consumer goods inventories.

Spain’s Ibex 35 fell 0.6 percent after the country announced inconclusive election results over the weekend, with both the right and left failing to secure a clear path to government formation.

Across the Atlantic, the US Federal Reserve is expected to raise its key interest rate by 0.25 percentage points on Wednesday, from its current target range of between 5 percent and 5.25 percent.

However, investors and economists are divided over whether the rally will mark the end of the US central bank’s 16-month tightening campaign, after inflation data earlier in the month showed that consumer prices rose at the slowest pace since 2021.

Contracts tracking the benchmark S&P 500 on Wall Street rose 0.2 percent, while those tracking the technology-focused Nasdaq 100 added 0.3 percent before the New York open.

Stocks sold off on Wall Street late last week, after a string of disappointing earnings reports sent the high-flying tech sector lower.

Investors will be paying particular attention to industry giants Microsoft and Alphabet, due to their earnings announcements on Tuesday, followed by Meta on Wednesday.

In Asia, China’s benchmark CSI 300 index fell 0.4 percent, while Hong Kong’s Hang Seng index lost 2.1 percent.

As China’s economy struggles to recover from three years of severe Covid-19 lockdowns, investors are hoping for more stimulus measures from the country’s officials at this week’s widely expected Politburo meeting.

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