European session review: EUR advances as Eurozone posts a record June manufacturing PMI

EUR rose against its major rivals in the European session on Thursday, supported by an upward revision to the Eurozone’s June manufacturing PMI. 

IHS Markit reported its final estimates showed that the expansion of the Eurozone’s manufacturing sector hit new heights during June, with the headline PMI registering a fresh survey record for a fourth successive month. According to the report,  the IHS Markit Eurozone Manufacturing PMI rose to 63.4 last month, up from 63.1 in May and firmer than a preliminary estimate of 63.1. Production growth in the Eurozone’s manufacturing sector remained elevated during June, edging up slightly since May to a level close to the survey records registered earlier in the year, the IHS Markit notes. Output continued to grow at especially strong rates in both Germany and the Netherlands.

The region’s May data on the jobless rate also offered cause for optimism. According to Eurostat, the euro area’s unemployment rate declined to 7.9% in May from 8.1% in the previous month. Economists had forecast the rate to edge down to 8%. This was the lowest reading since May 2020. The number of people out of work decreased by 306,000 from the previous month, as the region’s labor market showed signs of recovery amid the gradual easing of coronavirus restrictions. 

Investors also digested media reports that the ECB is to lift the dividend cap on banks in the near future and plans to hold several special meetings in the coming weeks to work out differences surrounding its new inflation strategy.