Slowing Eurozone PMI Data Brings EUR/USD Exchange Rate Losses
The Euro (EUR) has made a minor decline against the US Dollar (USD) today, trading at a level of $1.1682.
This dip follows the publication of preliminary Eurozone PMI figures for July.
While none of the readings have shown an outright drop into contraction, the stats have still lowered confidence among EUR traders and devalued the single currency.
The data was compiled by IHS Market and company Chief Business Economist Chris Williamson said:
‘The flash PMI suggests the Eurozone started the second half of the year on a relatively soft footing, indicative of GDP growth slowing in the third quarter.
‘The July reading is consistent with quarterly GDP growth of 0.4%, down from a 0.5% expansion indicated by the surveys for the second quarter.
‘The renewed slowdown comes as a disappointment, confirming suspicions that June’s rebound was temporary, largely due to businesses in some countries making up for an unusually high number of public holidays in May.’
More broadly, Markit data showed that growth in Germany, the Eurozone’s largest economy, was contrasting with difficulties elsewhere:
‘By country, faster growth in Germany contrasted with a slight slowing in France. Elsewhere, growth was the weakest for 21 months, slipping lower in both manufacturing and services.’
US Dollar to Euro (USD/EUR) Exchange Rate Rises on Bundesbank Forecast
An optimistic prediction about the US economy has supported the US Dollar to Euro (USD/EUR) exchange rate today, amid wider concerns about international relations.
Bundesbank analysts predict that if the Chinese economy declines then the US could capitalise on this and boost private consumption and investment.
China has been a trading giant for decades, but Bundesbank’s predictions are not entirely unfounded because of forecasts for a slowdown in Chinese GDP growth.
Euro to US Dollar Exchange Rate Forecast: Are More EUR/USD Losses ahead on German Confidence Stats?
The Euro (EUR) is at risk of making sustained losses against the US Dollar (USD) on Wednesday morning, when high-impact German survey data comes out.
Before then, however, there is a small chance for Euro to US Dollar exchange rate gains on this afternoon’s July US PMI estimates.
These are tipped to show a slowdown for the overall composite PMI reading, which might lead to the US Dollar sliding in value.
Getting back to the next Eurozone ecostats, Wednesday morning will bring German survey statistics from data-compiling company Ifo.
July’s German surveys are expected to show a lower reading for business climate conditions, along with falling current conditions and future expectation figures.
Three signs that German economic confidence is falling might push the Euro down against the US Dollar, as this would have negative implications for Germany.