(News Bulletin 247) – The euro zone currency lost 0.9% against the greenback at the end of the morning.

The euro was down sharply on Friday against the dollar, destabilized by the sharp slowdown in growth in June, according to the Flash index published by S&P Global.

Around 11:40 a.m., the euro lost 0.93% to 1.0854 dollars and 0.92% to 155.35 yen.

“The dollar is benefiting from its safe haven status as market conditions have deteriorated,” said Ricardo Evangelista, analyst at ActivTrades. The yen is also considered a safe haven.

At 50.3 in June, the Flash PMI index calculated on the basis of business surveys is at its lowest for five months.

The survey reveals “the return of a sluggish economy” in Europe, “after the brief rebound in the economy observed in recent months,” said S&P.

Risk of recession in Europe

“A priori, the index still shows slight growth in the economy in the second quarter, but the PMI has not been a reliable indicator lately because it had overestimated GDP growth in the first quarter”, adds Giulia Belliscoso, analyst at Capital Economics. The risks of recession in Europe seem to be increasing.

On Thursday, the Bank of England raised its key rate by 0.5 percentage points, an announcement that did not benefit the pound, as investors focused on the risks for the economy. On Friday, the British currency fell 0.33% to 1.2706 dollars, although it gained 0.61% to 85.42 pence per euro.

Later in the session, the PMI index for the United States will be published, and “a deceleration in growth is expected”, remarks Josh Mahony, analyst at IG.

Elsewhere, the Turkish lira continues to tumble, losing 1.6% to 25.31 pounds to the dollar, after sinking to 25.48 pounds, a new all-time low. Turkey’s central bank raised its key rate to 15% on Thursday, but in the face of out-of-control inflation, markets were hoping for even stronger action.

In addition, “the return to an orthodox monetary policy implies a readjustment of the level of the pound”, which had been supported by the authorities on the foreign exchange market, notes Derek Halpenny, analyst at MUFG.

(With AFP)