Euro to US Dollar (EUR/USD) Exchange Rate Trends Narrowly in Advance of Services PMIs
Ahead of today’s raft of Eurozone Services PMIs and the US ISM Non-Manufacturing PMI the Euro to US Dollar (EUR/USD) exchange rate has been trending narrowly. Pundits are relatively confident that the Eurozone’s service sector will demonstrate greater strength than its struggling manufacturing industry, although caution is nevertheless weighing on the single currency on Wednesday morning. As a result the EUR/USD exchange rate was on a slight downtrend around 1.0914.
After a discouraging raft of manufacturing data the Euro to US Dollar (EUR/USD) exchange rate has continued to make gains this morning following an unexpectedly improved German Unemployment Rate.
Disappointing US Manufacturing PMI set Euro to US Dollar (EUR/USD) Exchange Rate on Uptrend
Despite a less than encouraging set of Eurozone Manufacturing PMIs the Euro to US Dollar (EUR/USD) exchange rate returned to an uptrend on Monday, as traders continued to dismiss the likelihood of the European Central Bank (ECB) delivering on its suggestions of further monetary loosening in March. Manufacturing in both France and Germany proved disappointing, helping to drag the currency union’s overall figure down in spite of stronger showings from Italy and Spain. This seemed to suggest that negative global pressures were impacting the strength of the Eurozone, an unwelcome prospect amid the current market volatility.
Although the December US Personal Consumption Expenditure Core figure matched expectations at a steady 1.4%, the appeal of the US Dollar (USD) was dented by equally weak manufacturing data. The ISM Manufacturing Index failed to strengthen as far as pundits had hoped, printing at 48.2 rather than 48.4, to indicate that the world’s largest economy was struggling to shrug off the impact of the wider global slowdown. With the Fed likely to take a more cautious view on monetary policy as a result of this latest weakness the ‘Greenback’ softened in response, in spite of the day’s surge in safe-haven demand.
German Unemployment Rate Betters Expectations to Bolster Euro (EUR) Exchange Rate Today
The Euro (EUR) has been shored up further this morning by the revelation that Germany’s Unemployment Rate unexpectedly dipped to 6.2% in January, with a decline of -20,000 unemployed. While the Eurozone’s powerhouse economy continues to show some signs of weakness this more bullish figure has prompted investors to favour the single currency, particularly as markets remain bearish in the wake of China’s disappointing manufacturing data. This surprise decline could bode well for this morning’s Eurozone Unemployment Rate, with a further decrease in unemployment likely to push the Euro higher against rivals.
EUR/USD Exchange Rate Forecast: Dovish Fed Comments to Weigh on US Dollar
Wednesday’s ISM Non-Manufacturing Composite Index could soften the appeal of the US Dollar further, with a fresh decline forecast to show that volatile conditions have dragged on the rest of the domestic economy. Investors will also be keen to hear from Kansas City Fed President Esther George this evening and looking for any further indications of sentiment amongst Fed policymakers with regards to the outlook of the US economy and monetary policy. Should George take a more dovish tone and suggest that the Federal Open Market Committee (FOMC) is unlikely to hike interest rates again in the near-term the EUR/USD pairing is predicted to advance strongly.
Current EUR, USD Exchange Rates
At the time of writing, the Euro to US Dollar (EUR/USD) exchange rate was making gains around 1.0914, while the US Dollar to Euro (USD/EUR) pairing was slumped in the range of 0.9161.