Falling Eurozone Unemployment Rate Leaves EUR/USD Exchange Rate Tight
The Euro (EUR) has held close to opening levels against the US Dollar (USD) today, with mixed Eurozone data limiting demand for the single currency.
Looking back, the Euro is trading at an over-two week low against the US Dollar following last week’s losses.
On the plus side, today has brought news of a reduction in the Eurozone unemployment rate during August with a drop from 8.2% to 8.1%.
This is almost the lowest level of unemployment in a decade; the last time unemployment hit 8% was in November 2008.
Nations like Spain and Germany still face high levels of unemployment, but the overall Eurozone reading has been supportive today.
Eurozone PMI Drop Limits EUR/USD Exchange Rate Performance
Today’s less supportive Eurozone news has consisted of manufacturing PMI readings for September, which have revealed slowing activity across the board.
The finalised figures have confirmed that sector activity fell last month, although none of the readings have fallen into the sub-50 point contraction range.
Commenting on the Eurozone-wide PMI reading, IHS Markit Chief Business Economist Chris Williamson said:
‘Eurozone manufacturing shifted down yet another gear at the end of the third quarter.
‘The sector has seen booming growth at the start of the year rapidly fade to the worst performance for two years in September as production and jobs growth have slowed in response to a stalling of export trade.
‘The survey paints the worst trade picture for over five years, with export growth having slumped sharply from a series record high in late 2017 to near-stagnation in September.’
US Dollar to Euro (USD/EUR) Exchange Rate Steady after USMCA Announcement
The US Dollar (USD) has traded tightly against the Euro (EUR) today, following news of an agreement between the US, Canada and Mexico on trade.
The three nations had been locked in trade renegotiation talks since early 2017, but have now provisionally settled on the ‘US-Mexico-Canada Agreement’ (USMCA).
This will replace the North American Free Trade Agreement (NAFTA), a previous trade deal that US President Donald Trump objected to.
The US Dollar has not yet rallied today despite the positive news, primarily because precise details about the USMCA haven’t materialised.
Euro to US Dollar Forecast: Will EUR/USD Rise on US Manufacturing Slowdown?
The Euro (EUR) could rise against the US Dollar (USD) this afternoon, when US manufacturing PMI data is due out.
In something of a reversal of fortunes, the US Dollar might decline against the Euro if manufacturing sector activity is reported lower during September.
ISM is expected to report a dip in manufacturing activity levels, but IHS Markit are predicted to say that manufacturing activity rose during the month.
If both analysts say that manufacturing activity slowed in September then the US Dollar could fall in value, which would open the door to a EUR/USD rate rise.