Investing.com – Citigroup has doubled down on its bearish stance, citing the current disappointing European financial exercise knowledge.

Knowledge launched earlier this week confirmed that eurozone enterprise exercise contracted sharply this month.

HCOB’s preliminary , compiled by S&P International, sank to 48.9 this month from August’s 51.0, under the 50 mark that separates progress from contraction for the primary time since February.

The downturn appeared broad-based with Germany, Europe’s largest economic system, seeing its decline deepen whereas France, the bloc’s second largest – returned to contraction following August’s Olympics enhance.

The financial institution cited draw back dangers to progress within the eurozone, saying manufacturing stays a drag whereas the one- off boosts to companies (e.g., Olympics) could also be reversing. 

“Furthermore, whereas the manufacturing stoop is a world problem, the US stays extra insulated than Europe,” Citi stated. “With markets pulling ahead Fed cuts after the September FOMC, we expect focus can shift as to whether the ECB is falling behind the curve, notably if European knowledge proceed to weaken whereas US preliminary claims stay low.”

The backdrop can be one the place US election threat ought to resurface as a headwind for EUR; swing state polling is tight (we count on some USD+ premium to be priced) and the subsequent US jobs report just isn’t till Oct. 4. 

“We stay brief EUR/USD in each spot and choices,” says Citi, ceiling a spot reference fee of 1.1112.

At 07:35 ET (11:35 GMT), EUR/USD rose 0.1% to 1.1122.