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Disappointing US Services PMI Leaves Euro US Dollar (EUR/USD) Exchange Rate Flat

Euro US Dollar (EUR/USD) Exchange Rate Muted as ISM Services PMI Slows More than Expected

The Euro US Dollar (EUR/USD) exchange rate remained flat on Wednesday afternoon following US services PMI data. The pairing is currently trading at around $1.1088.

November’s US services PMI revealed that business activity growth strengthened thanks to an increase in new business.

However, optimism remained historically subdued and new business from abroad fell for the fourth month in a row.

Commenting on today’s services PMI data, Markit’s Chief Business Economist, Chris Williamson said:

‘With both services and manufacturing reporting stronger rates of expansion, the November PMI surveys indicate the fastest pace of economic growth for four months. The improvement is coming from a low base, however, and even at these higher levels the survey is merely indicative of annualised GDP growth in the region of 1.5%.

‘Similarly, while reviving order book growth has encouraging more companies to take on extra staff after two months of net job losses being reported, the survey’s employment index continued to run at a level consistent with monthly jobs growth of only around 100,000.’

Meanwhile, the US Federal Reserve’s preferred PMI measure from ISM revealed service sector activity slowed more than expected.

ISM’s non-manufacturing PMI fell to 53.9 in November from the previous month’s reading of 54.7.

‘Near-Stagnant’ Eurozone Economy Leaves Euro (EUR) Flat

Meanwhile, the single currency remained flat as PMI data revealed stagnant work in the Eurozone limited November’s private sector growth.

The bloc’s final PMI composite revealed that the rate of growth was unchanged from October, posting at 50.6, remaining at the lowest levels in around six-and-a-half years.

Added to this, the bloc’s services PMI was the second-lowest the survey has recorded since January, which dampened Euro sentiment.

Commenting on this morning’s data, Markit’s Chief Business Economist, Chris Williamson said:

‘The final Eurozone PMI for November came in slightly ahead of the earlier flash estimate but still indicates a near-stagnant economy. The survey data are indicating GDP growth of just 0.1% in the fourth quarter, with manufacturing continuing to act as a major drag. Worryingly, the service sector is also on course for its weakest quarterly expansion for five years, hinting strongly that the slowdown continues to spread.’

US-China Tensions Escalate Over Uighur Legislation

On Wednesday, US President Donald Trump said that trade talks with Beijing were going ‘very well’, sounding increasingly upbeat.

This came just a day after Trump stated a deal may have to wait until after the 2020 US election.

However, tensions between the two countries increased today, thanks to US legislation over China’s Uighur Muslim population.

The House of Representatives called for a tougher response to Beijing’s treatment of the minority population, further clouding prospects of a trade deal being reached this year.

Reports have stated that the bill could complicate the highly-anticipated ‘phase one’ deal.

When questioned by reporters about whether the bill would affect trade negotiations, Chinese foreign ministry spokeswoman, Hua Chunying said:

‘Do you think if America takes actions to hurt China’s interests we won’t take any action. I think any wrong words and deeds must pay the due price.’

Euro US Dollar Outlook: Will Strong US Factory Orders Buoy USD?

On Thursday, the Euro (EUR) could slump against the US Dollar (USD) following the release of Germany’s factory orders data.

If October’s factory orders do not rise as high as expected, the single currency could be left under pressure.

Meanwhile, stronger than expected US factory orders could buoy the ‘Greenback’.

If monthly orders increase more than forecast after September’s disappointing slump, the Euro US Dollar (EUR/USD) exchange rate could fall.