The euro fell below $1.30 against the dollar amid signs of a further slowdown in the eurozone economy that raised expectations the European Central Bank would cut interest rates again.

The single currency hit a two-week low at $1.2971 after purchasing manager indices showed a further slowdown across the eurozone’s manufacturing and services industries in April.

The euro had already come under pressure amid signs of a slowdown in the wider global economy, after a preliminary PMI index for China by HSBC indicated the manufacturing sector grew at a slower rate in April.

Foreign currency analysts said the poor data increased the chances the ECB would cut rates when it meets at the start of May. Comments from ECB officials in recent days have suggested the central bank is considering lowering its main refinancing rate from 0.75 per cent to help stimulate growth in the sluggish eurozone economy.

“The risk is now clearly for the ECB to deliver a 25 bps cut next week,” said Beat Siegenthaler, a foreign currency strategist at UBS.

The euro was later 0.5 per cent lower against the dollar at $1.3009 and fell 0.3 per cent against the pound to £0.8519.

The Japanese yen initially strengthened amid the risk aversion, with the dollar falling below Y99 to hit a daily low of Y98.47. But it later resumed its weakening trend, with the dollar hitting a high of Y99.52 later in the day. The euro pared earlier losses and was later 0.3 per cent lower against the yen at Y129.26.

The dollar was stronger against other leading currencies with the dollar index gaining 0.3 per cent. The pound fell 0.2 per cent to $1.5266. The Australian dollar lost 0.1 per cent to $1.0262.

The Swiss franc was one of the worst performing major currencies, with the dollar rising 1 per cent to SFr0.9431. The euro hit its strongest level in more than a month at SFr1.2271, a gain of 0.5 per cent.

Geoff Kendrick, an analyst at Nomura, said that the franc was weakening as demand for peripheral eurozone bonds rose, as money moved out of the haven country.

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