Euro Gains, Weak Economic Outlook Can Cap Advances

Published on Jul 26, 2023 15:32

The EUROINR futures are edging up today amid a decent recovery in the Euro in global currency markets. EURUSD is off its two week low and currently quotes at 1.1100, up 0.23% on the day. The EURINR futures on the NSE are tracking this and trade at 90.86, up 0.41% on the day- holding near day`s high. Euro has been on a downhill recently amid tepid economic outlook. The IMF noted yesterday that growth in the euro area is projected to fall from 3.5 percent in 2022 to 0.9 percent in 2023, before rising to 1.5 percent in 2024. The forecast is broadly unchanged, but with a change in composition for 2023. Given stronger services and tourism, growth has been revised upward by 0.4 percentage point for Italy and by 1.0 percentage point for Spain. However, for Germany, weakness in manufacturing output and economic contraction in the first quarter of 2023 means that growth has been revised downward by 0.2 percentage point, to -0.3 percent. This can keep the advances in check for the single currency though near term momentum is turning highly volatile ahead of the US Fed monetary policy meet today and the ECB monetary policy outcome tomorrow.