Mon Sep 23 15:17:46 UTC 2024: ## Euro Weakens as Eurozone Economy Stumbles, Dollar Gains on Fed Rate Cut
**New York:** The euro tumbled against the dollar on Monday, driven by disappointing economic data from the Eurozone, which fueled expectations for further interest rate cuts by the European Central Bank (ECB). Meanwhile, the dollar strengthened after a recent rate cut by the Federal Reserve (Fed) and ahead of several Fed speeches this week.
A survey by S&P Global revealed a sharp contraction in Eurozone business activity in September, with the dominant services sector stagnating and manufacturing decline accelerating. This further solidified expectations for the ECB to cut interest rates at their October meeting.
In contrast, U.S. business activity remained steady in September, with price increases for goods and services at their fastest pace in six months, potentially signaling an acceleration in inflation in the coming months.
The Fed’s recent outsized 50 basis point rate cut last week, which several officials commented on as a means to maintain a healthy economic balance, contributed to the dollar’s rise.
Michael Green, portfolio manager and chief strategist at Simplify Asset Management, explained, “We’re largely looking at interest rate expectations… anything that would cause the market to reprice closer to where the Fed is, is likely to provide at least some benefit to the US dollar.”
The dollar index, which tracks its value against a basket of currencies, rose 0.05% to 100.83, while the euro dropped 0.39% to $1.112, on track for its largest daily decline since September 9.
The British pound also strengthened against the dollar after a similar survey showed a slowdown in growth in the UK, although less severe than in the Eurozone.
The yen weakened against the dollar after the Bank of Japan (BOJ) maintained interest rates unchanged and indicated no immediate plans to raise them again.
With several Fed officials, including Chair Jerome Powell, scheduled to speak this week, the dollar’s trajectory is likely to be heavily influenced by their comments. Policy announcements from the Swiss National Bank and Riksbank are also expected later this week.
First Piper 