• EUR/USD declines into five-week lows as safe haven flows pick up the Greenback.
• PMI figures from both the EU and the US due on Wednesday.
• ECB rate call to take center stage on Thursday, US PCE inflation on Friday.

The EUR/USD tumbled into fresh lows for 2024, hitting its lowest bids in nearly six weeks after the Euro extended broad-market declines on the back of souring consumer sentiment and declining bank lending activity confirmed by the latest Bank Lending Survey from the European Central Bank (ECB).

Europe saw extended declines in the Euro (EUR) after the ECB confirmed that business and lending activity in the euro area continued to decline. High interest rates exacerbated overall declines in bank lending activity across the continent, and European banks further tightened lending conditions through the fourth quarter of 2023.

Daily digest market movers: EUR/USD backslides as bad data releases pile up

• The European Consumer Sentiment Index declined to -16.1 in January versus the forecast rebound from December’s -15.0 to .14.3.
• The US Richmond Fed Manufacturing Index also declined to its lowest level in nearly four years in January, printing at -15 compared to December’s -11 and missing the market’s forecast recovery to -7.
• The ECB’s latest Bank Lending Survey showed bank lending activity declined further in the fourth quarter, with high interest rates and souring consumer sentiment specifically highlighted as key triggers.
• The ECB noted that European banks have broadly tightened lending conditions, squeezing credit access that has already seen slumping demand.
• Overall loan demand from both businesses and households is expected to decline further in 2024’s first quarter.
• Lending activity declines slowed in the fourth quarter, but continue to slowdown, exacerbating declines in economic activity.
• Wednesday brings Purchasing Managers’ Index (PMI) figures for both the euro area and the US.
• Markets are hoping the pan-European HCOB Composite PMI sees a slim gain from 47.6 to 48.0.
• The euro area’s Composite PMI has been in sub-50.0 contraction territory since July.
• US Services PMI is expected to decline slightly from 51.4 to 51.0.
• ECB descends on markets with its latest rate call on Thursday.
• Market expectations of steep and dep rate cuts from the ECB have been pushed back by central bank officials constantly warning that market hopes for rate cuts have run too far ahead of what policymakers can deliver