The single currency fell yesterday after the closely-watched PMI surveys showed the euro zone's manufacturing and service sectors are now contracting, while the German Ifo business confidence index also fell sharply. Today brought more bad news with the Gfk market research institute reporting its consumer climate index for Germany is forecast to be 3.9 points in July compared with 4.7 points in June - analysts had expected only a modest decline to 4.6. However Matthew Foster-Smith at Thomson IFR Markets said sovereign wealth funds buying up euros have provided the currency with some support. "This euro buying was linked to diversification after Asian intervention to prop local currencies overnight," he said. The latest batch of euro zone data has pointed to a slowing economy, but with no sign of a slowdown in inflation markets still expect the European Central Bank to raise interest rates next week. Later today ECB President Jean-Claude Trichet speaks at a conference on wage dynamics where he is likely to warn against the dangers of the current spike in inflation feeding through into wage deals. "Given the ECB's concern over second round inflation, it makes little sense for Trichet to not be hawkish at such a conference - this is likely to get the market excited on a series of rate hikes by the ECB," said analysts at BNP Paribas.