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Euro falls to two-year low after PMI data plunges

BY Reuters | ECONOMIC | 04:09 AM EST

LONDON, Nov 22 (Reuters) - The euro dropped to its lowest since December 2022 on Friday after data showed euro zone business activity tumbled in November as the bloc's dominant services industry contracted and manufacturing sank deeper into recession.

The common currency was last $1.0432, down 0.37% on the day, falling past its October 2023 level.

Euro zone government bond yields also fell after the data, and markets increased their expectations of the scale of European Central Bank rate cuts. (Reporting by Alun John, editing by Dhara Ranasinghe)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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