European session review: EUR weakens as investors weigh news that EU members are still far apart on recovery fund and encouraging euro area manufacturing data

EUR fell against most major currencies in the European session on Wednesday, as investors weighed upbeat Eurozone data on manufacturing sector activity and the statement by the German Chancellor that EU members are still far apart on the recovery fund.

The latest survey from IHS Markit revealed that Eurozone's manufacturing sector moved towards stabilization in June as Europe’s economies lifted COVID-19 restrictions. According to the report, IHS Markit Eurozone Manufacturing PMI rose to a four-month high of 47.4, up from 39.4 in May and an improvement on the earlier flash reading of 46.9. Nonetheless, the survey suggested the Eurozone's manufacturing sector remained in contraction territory for 17 successive months. 

Germany’s manufacturing sector also contracted in June, albeit at a slower pace (the IHS Markit/BME Germany Manufacturing PMI climbed from May's 36.6 to a three month high of 45.2). Meanwhile, France reported an expansionary reading (the IHS Markit France Manufacturing PMI surged to 52.3 from 40.6 in May).

Improved Eurozone's factory activity data allayed some of the fears over growing global coronavirus infections.

Germany's Chancellor Angela Merkel stated on Wednesday that EU members are still far apart on the recovery fund and budget. She also added that the EU must be prepared for the possibility that Brexit talks might end in failure. These statements dragged the single currency to the lows for the day.